THE IMPACT OF REINSURANCE ON THE PERFORMANCE OF INSURANCE COMPANIES IN NIGERIA
Abstract
ABSTRACT
Nigerian insurance companies have been facing several challenges on how to meet up with their profitability goal effectively and efficiently. Consequently, the determinants of insurers’ profitability have fascinated the attention of practitioners, investors, researchers, financial markets analysts and insurance regulators. This study bothered on how insurance companies in Nigeria hedges against risk through reinsurance purchasing. The study adopted purposive sampling technique and structured questionnaire was administered on 150 respondents that were technical personnel in insurance companies. Descriptive statistics was used to analyzed the socio-demographic section of the questionnaire while chi-square were used to analyze the research question and research hypothesis respectively. The findings of the study revealed that reinsurance practices put in place have significant relationship on the profitability of insurance companies in Nigeria. Also, risk sharing method by the insurance companies also have a positive significant on the profitability of the insurance companies. Therefore, the study recommended that insurance companies in Nigeria should put proper reinsurance programs in place, taking into consideration the characteristics of their underwriting book such as past loss experience, size of risks and frequency of losses.
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