13
CHAPTER TWO: REVIEW OF RELATED LITERATURE
2.1 Introduction 16
2.2 Classification of Insurance 17
2.3 Principles of Insurance 22
2.4 Notification of Claims 24
2.5 Investigation of Claims 24
2.6 Circumstances given rise to Claim 25
2.7 Claims Report 26
2.8 The Problems, affecting effective claims settlement in Nigeria 26
2.9 Negotiating an Insurance Claim Settlement 28
2.10 Negotiating Your Car Accident Insurance Settlement 31
2.11 How to Claim Life Insurance Settlement 37
References 40
CHAPTER THREE: RESEARCH DESIGN AND METHODOLOGY
3.1 Research Methodology 41
3.2 Research Design 41
3.3 Methods and Sources of Data 42
3.4 Population 42
3.5 Sample Size 44
3.6 Sample and Sampling Technique 45
3.7 Instrument for Data Collection 45
3.8 Data Analysis Method 45
CHAPTER FOUR: SUMMARY OF FINDINGS
4.1 Findings 46
4.2 General Analysis of Questionnaire Distributed 46
4.3 Testing of Hypothesis 55
CHAPTER FIVE: CONCLUSIONS AND RECOMMENDATIONS
5.1 Conclusions 57
5.2 Recommendation 58
Bibliography 60
Questionnaire 61
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
National Insurance Corporation is a corporation brought into being on July 1, 1968 by Cap 263, Laws of the Federal Republic of Nigeria (LFN) of 1990 as amended (hereunder referred to as NICON Act). NICON Assurance Plc was incorporated on Oct 2001 and a private treaty which became effective in October, 2001. NICON Assurance Plc acquired the business (assets and liabilities) of national Insurance Corporation of Nigeria (NICON or the corporation). This acquisition is to the extent, to set out the transaction and in exchange for which 1,000,000,000 shares of NICON Assurance Plc was issued to the ministry of finance in corporate as the sole shareholder of NICON. The name was changed to NICON insurance Plc.
NICON on creation by law had initial share capital of two million naira divided into 20,000 ordinary shares of N100 each to be held exclusively by the Federal Government of Nigeria. Since then, the share capital of the corporation has been increased several times through capitalization of profits. Federal Government’s shares held are on its behalf by the Federal Ministry of Finance incorporated, the federal government’s investment vehicle.
The corporation’s share capital now stands at one billion naira divided into 5000,000 ordinary shares of N200 each. Under the NICON Act, the minister can increase the share capital without limit subject to the approval of the Federal Executive Council.
Today National Insurance Corporation of Nigeria carries out its business under the style and the name of NICON Insurance Corporation.
Prior to the establishment of the national Insurance Corporation of Nigeria (NICON), the Insurance industry was largely made up of foreign owned insurance companies whose business operations did little to foster the economic and social development of the country. Furthermore, before the enactment of the Company’s Act 1968, like most foreign companies, they operated as branches of their parent companies, which were invariably domiciled abroad.
NICON was created in order to break the domination of the Nigeria insurance industry by foreign companies were remitted abroad, thereby putting a let of pressure on the country’s balance of payment. In 1962, an adviser to the Federal Government of Nigeria on insurance matters submitted a feasibility report on the benefits of insuring export-bound Nigeria agricultural produce. This found the basis of subsequent deliberations and recommendations on the formation of an indigenous government owned insurance company with the encouragement given to developing nations by United Nations Committee on Insurance Companies urging them to seek considerable economic independent by investing directly in critical sectors of the economy such as banking and insurance. At the request of the government of Nigeria an insurance expert was send by the United Nations to provide technical assistance. The establishment of a government-owned Insurance Corporation was recommended. It was envisaged that all operating insurance companies in the country would be compelled to cede ten percent (10%) of their risks to the proposed government owned insurance company in the first phase of the corporation’s development. The second phase of the corporations operations was expected to vest in the corporation of the sole right to insure government properties by which time it was believed, the corporation would have acquired by the requisite technical and administrative skills and some experience in re-insurance.
However, NICON was by stature at inception given the sole right to provide insurance cover for all government asserts statutory corporations and state owned companies and with the powers to under-take re-insurance business.
In establishing the corporation, the following specific objectives were set out in section 4, sub-sections 1-6 of the NICON Act No. 22 of 1969.
a. To carry on any class of insurance business and to insure reinsure in respect of such insurance business.
b. To be responsible for the insurance of any property of the government of any state in the federation or any statutory corporation.
c. To receive compulsory insurance cession from other registered corporations.
d. To assist in organizing the insurance industry as a strong viable and efficient economic sector, and.
e. To act as insurance brokers in respect of insurance of government assets or those of its paratatals.
According to Willer Buoker (2004:45) who stated that, insurance is an arrangement by which one party (the insurer) promises to pay another party a sum of money called premium, if something unexpected should happen which can causes the insured to sustain a financial loss.
Yinka Lijadus (2002) stated that, the responsibility for paying such losses is then transferred from the policyholder to the insurer. In return for accepting the burden of paying for loses when the events occur, the insurer charges the insured a price called the insurance premium.
Furthermore, Growth was not phenomenal until the Nigeria economy of the 60’s and early 80’s often described as the “mushroomery era” of the market, obviously, a lot of the malpractices especially on claim settlement crept into the industry, which the earlier laws of 1961 and 1965 could not effectively cope with. There were cases of insurer denying liabilities on the robbery of a car on the ground that only theft cover is granted.
The creation and maintenance of a good public image presents continuing difficulties and much still remains to be done. Also the danger of not appreciated by the public. Little general information is available in other field such as public liabilities contractor and all risk etc.
In spite of this, the regulation of any insurance company depends to a large extent on the sort of claim service rounded by the company.
An unreliable and inefficient claims department could ruin the reputation of a company once they discover that the company is reluctant to pay or delays payment without good reason of their genuine claims.
In order to guard against delay in the settlement of claims the insurance decree of 1976 list some condition under which the director of insurance may council the certificate of registration of insurance company. Therefore, an insurance who makes it a matter of regular practice of delaying claim payment may stand the risk of having his license canceled.
1.2 STATEMENT OF PROBLEM
According to J.O. Irukwu (1999:4) who stated that the insurance companies in Nigeria are finding it difficult to keep to their fidelity the insured have in them. The following factors are contributory factors that affect the claim settlement on profit maximization in the insurance industries.
a. Insurance is so intangible and in many cases it has to be explained on a secure public interest by legible product such as a car which can provide immediate benefit and enjoyment.
b. Insurance is highly technical: A policy is contract which has to be carefully warded and misconception and doubts easily arise in public minds many people say that policies are written in deliberate jargon.
c. The need for insurance is not really recognized more insurance is sold than it is bought.
d. Insurance are not always able to accept proposals, from all the elements of selection often present.
e. The value of insurance, not only to the individual but also to the economy of the country, it is not easily appreciated by the general public. The fact that insurance is an export is slowly becoming known but parts played by branches such as find protection and aims protection are still not widely known.
The public is slow to recognized that in many respects insurance provide what almost amount to social services, a fact which is more readily appreciated when other industries are concerned.
Furthermore, an unpleasant habit of non-payment of premium is regrettably emerging some policyholders most especially the co-operations and government owned companies. The Nigeria for this unwhole some development is that, many of the insured out of ignorance and belief relegate insurance matters to be background in their scale of priority where expenditures are concerned.
It is quite an indisputable fact that the industry had created some image problems for itself over recent years through the operational malpractice of its members particularly some unscrupulous brokers and fraudulent agents. As a result, many people perceived insurance as a legalized robbery with this already dented image when companies are facing serious economic and financial problems. The answer quite clearly in aforementioned is that the need of insurance as a means of protecting investments has never much more manifested than now.
It is very difficult for companies, individuals and even government to raise new capital to invest on various project and business enterprises.
Consequently, there is utmost need for every investor to take serious steps to secure and ensure that the investment already had are prevented from loss and distraction.
1.3 OBJECTIVE OF THE STUDY
1. To find out the effect of unsettled claims on profit maximization in the insurance industry like NICON.
2. To find out weather creation of disputes on insurance contractors is one of the claim settlement on profit maximization.
3. To find out weather claim settlement involving policyholder on default has any effect on profitability in insurance industry.
4. To find out the effect of claims concerning third party insurance and profit maximization.
5. To find out the effect of prompt settlement of claims on profit maximization in insurance industry.
1.4 RESEARCH QUESTIONS
And that is why the researcher has decided to come up with the following questions.
1. What is the effect of unsettled claim on profit maximization in insurance industry?
2 What is the cause of disputes among the insurer and the insured on claim settlement in insurance industry?
3 What is the effect of claim settlement on profit maximization on the side of policyholders in case of default and on the uneducated public?
4 What is the effect of claim concerning third party insurance and profit maximization?
5 What is the effect of prompt settlement claims on profit maximization in insurance industry?
1.5 HYPOTHESIS
Ho: The effect of unsettled claim is not profit maximization in insurance industry.
H1: The effect of unsettled claim is profit maximization in insurance industry.
Ho: The cause of disputes among the insurer and the insured on claim is not settlement in insurance industry.
H1: The cause of disputes among the insurer and the insured on claim is settlement in insurance industry.
Ho: The effect of claim settlement on profit maximization on the side of policyholders in case of default and on the uneducated is not public.
H1: The effect of claim settlement on profit maximization on the side of policyholders in case of default and on the uneducated is public.
Ho: The effect of claim concerning third party insurance and profit maximization is not favourable.
H1: The effect of claim concerning third party insurance and profit maximization is favourable.
Ho: The effect of prompt settlement claims on profit maximization in insurance industry is not acceptable.
H1: The effect of prompt settlement claims on profit maximization in insurance industry is acceptable.
1.6 THE SIGNIFICANCE OF THE STUDY
The misconception about insurance practice in Nigeria gives professional concern especially in relation to claim settlement. Average Nigerian believers that an insurance is tend to interpret the rules is not compiled with the insured. In Nigeria the insurers operate the rules strictly like their colleagues in developed countries yet their image has been dented because the average Nigeria seems not to understand the practice of insurance.
The important of this study will enable the insuring public to know the concept behind insurance practice and the rules guiding both the insurer during the negotiation of claims.
It is the aim of this study to state clearly that insurance industry is not set up to collect premium only but to reduce the risk where by the insured is given peace of mind that is, the event of damage or loss to his or her property certain sum of money will become payable.
This study will also enlighten the general public that, the insures do investigated public policy where there is suspicious of fraudulent and exaggerate claims in the present competitive environment coupled with worldwide recession, the implication for the insurance industry has been substantial drop in premium income for most classes of business and increasing incidence of claims.
Therefore insurance would not allow an insured person to take advantage of this economic recession by gaining that of their misfortune by deliberately damaging their property in order to claim the insurance money.
There have been allegations of malpractices, against the insurers. This research work would delve into such topics to determine whether they are factual.
1.7 SCOPE AND LIMITATION OF STUDY
The study covers in a general basis, the effect of claim settlement on profit maximization in the insurance industries like National Insurance Corporation of Nigeria (NICON). It particularly emphasizes on the coverage available to the effect of claim settlement.
This research work is also intended to cover the areas of the company’s operation which includes all those effect of claim settlement on profit maximizations.
Limitation: Limitation is in the areas of collection of data for this research study. The researcher encountered difficulties from the insurance companies chosen because they refuse to release their premium figure and claims settlement figures. One was offered to the Nigeria Insurance association, the body that is, responsible for the collection of data for insurance industries. Time factor and distance is also contributed to the limit of the research work.
TIME CONSTRAINTS: Being that the school was in session there was not enough time to run around and gather most relevant material for the study.
FINANCIAL CONSTRAINTS: Finance was another thing that was not always available as when needed.
Lack of data was a limiting factor, on the extent to which the researchers could go on the study.
1.8 DEFINITION OF TERMS
Some of the technical terms which were used in the course of the write up are below:
Agent: An agent is said to be a person employed to act on behalf of another person who initially has the authority being delegated.
Assurance: Term assurance is the earliest and simplest type of life assurance policy. This type of life assurance is been insisted for a fixed period and within that stipulated period. And the sum assured is not payable if the life assured survives that stipulated period. It is normally used for a business trip abroad and it has no investment element.
Brokers: They are agents in insurance business who set up business concern with the main function of linking the public wishing to take up polities with the insurance companies and also they save as the in idle men between their principle and customer real.
Endowment Policies: The sum assured is payable at the end of a fixed period or at previous death. This is the type of assurance which is obtained for a fixed period of time which the sum assured is paid at the attainment of that period or at the previous death which ever that comes first. It is the combination of term assured and pure endowment. It is the best type of assurance policy.
Claim: To demand or ask for something because you believed it is your legal right to have it.
Clients: This is a form which is obtained in case of losses.
Indemnity: This tends to be the compensation for losses of money or goods.
Settlement: Settlement is the action of reaching an agreement.
Insured: This is the person that is being covered by the insurance company against a particular risk. The insured is the person that is entitled to receive indemnity or compensation if the risk insured against occurred. He pays the insurer a regular amount of money called premium in order to be entitled to indemnity. If the risk insured against occurs. He is also called the policy holder.
Insurer: Is the person or company that agrees to take up the payment in case of loss.
Premium: It is a monetary consideration or payments that moves from the insured to the insurer for their undertaking (contract) to pay the sum insured in event of the risk insured against happens.
Principal: The principal is one with higher responsibilities that are being delegated to an agent.
Subrogation: Is the right of the insurer to take that place of the insured after the insurer has indemnified him i.e. the insurance company is the one entitle to dispose off scraps on the client had been indemnified.
Subordinate: This is said to be a junior in rank of position.
Uberima fides (utmost good faith): Uberima fides- utmost good faith is the principle which requires all the relevant facts to be disclosed.
CHAPTER TWO
THE REVIEW OF RELATED LITERATURE
2.1 INTRODUCTION
According to Okonkwo V.I (2002:10, 105) who stated that, there is a vacuum between the insurance company and the insuring public, which have been seen in different ways and given different name. we could see that, the business is so complication much that, it is beyond the under standing of an average policyholder. Most times the insuring public finds it difficult to understand the insurance policy from the insurance document the needs of individual policyholders is to seek of adequate information about the policies sold for a fair complaint procedure. Insurance is a highly complex subject because of the length of the business which involves a lot of technicalities and doctrine of precedents. Hence disputes always arose and there were inevitable arguments about the meaning and interpretation of words used in the policy document. Claims estimated are fully examined of the claims department is highly essential. The insured has the opportunity of realizing the work of the products and the reputation of the company. Citizens entering contract of insurance were advised to be fully conversant with their rights and duties.
Adesida E.O. (1999:175) who stated that, insurance companies were fully aware of their rights and duties under the law and any part to an insurance contract that was not so vigilant is likely to be ships-wrecked on the sea of speculation.
The insurer’s responsibility was to indemnity the policyholders within the terms of the policy. Disputing claims on insubstantial ground can only bring the insurance industry into dispute. A satisfied customer is the best advertisement for any business insurance is not exception.
2.1 CLASSIFICATION OF INSURANCE
According to Adesida E.O. (1999:175) who classified insurance according to their subject matter into the following categories.
a. Those covering property for example the fire insurance on building and their property of marine insurance on ship and cargo.
b. Those covering liabilities, for example, the employer’s liabilities to his work men for injuries at work or the liability of the motorist to other road users for damage to their property or injury to their persons arising from the use of the insured vehicle.
c. Those covering the person for example, personal accident insurance, granting benefits for accidental death or disablement and all classes of life assurance.
d. Those covering other rights, interest or contingence such as the fidelity guarantee insurance under which the insurance company under takes in consideration of the premium to indemnify the insured.
But in practice insurance, it is grouped under fire department:
a. The marine department
b. The life department
c. The motor department
d. The accident department
e. The fire department
Transportation in the year 1999 based on
1. Motor Insurance: For understanding purposes, the insurance industry classified the motor insurance motor the following.
Grouped according to the type of vehicles:
• Private cars
• Commercial vehicles
• Agriculture and forestry vehicles for especial construction such as mobiles shop and canteens.
The insurance industry allowed motorist a choice of four different motor covers. The higher the premium an insured was prepared to pay the more extensive cover he obtained.
THE FOUR TYPES OF MOTOR POLICY, BY AGWA .A. (1989)
a. Comprehensive Policy: This gives the widest cover including all the covers granted by each of the other types.
b. The Third party fire and theft policy: This policy insured the policyholder in respect of his legal liabilities for death or bodily injury to third parties on the road.
c. The Third Party Policy: This policy covers the policyholder or in respect of damage property of third parties as well as death or bodily injury to the third parties.
d. The Act Policy: This policy also covers the policy holder to the extent of the minimum insurance he must have in order to comply with the compulsory insurance requirement of the “road traffic law” it provides insurance cover for injury or death of third parties including passenger.
MARINE INSURANCE
According to Agwu Akpak (1989) who stated that, the marine insurance provides compensation for property losses and injury or damage to third parties caused by wrecks of the sea such as damage caused bad whether sinking, collision or streamline and by fire, theft etc.
Hull-Hull – losses relate to damage or loss of the vessel and associated machinery, policies available to cover vessels under construction or navigation on time or voyage basis.
a. Cargo: The insurance covers goods that have been sold and are usually on either a F.O.B (free on board) or C.I.F (lost of insurance and freight basis). AN F.O.B contract means that the seller’s responsibility ends once the cargo has been loaded at port of departure and therefore the cargo does the responsibility of the buyer. Under I.F. contract, the seller is responsible for arranging delivery and it must cover the cargo from the port loading to final destination. The sum insured is the limit of indemnity for any particular cargo insured.
b. Freight: This is the lost of transporting cargo including the live of a ship where necessary freight might be lost if the cargo could not be delivered.
Okonkwo A.I. (2002) stated the following terms
PECUNIARY INSURANCE
Fidelity Guarantee Insurance: This policy is an insurance against the result of dishonesty both of while stem from lack of fidelity.
Commercial Guarantee: Majority of policies issued are to commercial firms to indemnify the employer against direct pecuniary loss and in many case also was of stock, while is necessary after some physical properties had been damaged.
The policy compensation against damage to building and stock but not for loss of earnings that they provide, therefore the business interruption insurance would cover loss of net profit suffered as a result of fire damage.
LIABILITY INSURANCE
Employers Liability Insurance: The purpose of employers’ liability policy is to indemnify the employees (who is the insured) in respect of his legal liability to his employees for death or injury in the cause of their employment. The common law as well as the workmen’s compensation act imposes certain legal obligation on employees.
The workmen’s compensation act of this country imposes a strict liability (liability without fault or negligence) on all employers of labour. Under that acts, if workmen was killed or injured while acting within the course of his employment the employer must pay compensation to the workmen or to his legal personal representative in accordance with provision on the act.
PUBLIC LIABILITY INSURANCE
This kind of policy insures the policyholder against his legal liability to members of his public generally. The insurer on return for the premium under took to indemnity the insured against all claims made by third parties who suffered damage as a result of one insured’s negligence.
Act: Professional indemnity insurance. This intended to protect professional people such as lawyers. Insurance brokers, Doctors, Accountants, Engineers or Architects against any liability incurred as a result of their negligence e.g offering incorrect advise to clients or carelessness in carrying out their duties.
2.3 PRINCIPLES OF INSURANCE
1. Insurance Interest: Not all risks are insurable risk have certain characteristics. They must be capable of financial measurement. The risk must not be reasonable and finally there must be insurable interest on the part of the person insuring. It constitutes the legal right to insure.
2. Utmost Good Faith: In a time of writing this project the duty of utmost good faith as the positive duty to voluntary declare accurately and full, all facts materials to the risk being proposed whether they are asked for or not.
3. Material Fact: The definition of material fact is contained in the marine insurance act of 1906 section (2) in these words includes every necessary information concerning the property to be insured.
4. Proximate Cause: These means the active efficient cause that sets in motion a trend of event, which brings about a result, without the intervention of any force started and working actively from a new and independent source. It is neither the first cause nor the last cause but the dominant cause. It can only be understood by applying common sense.
5. Indemnity: This is a mechanism by which the insures provide financial compensation in an attempt to place the insured in the same primary position after a loss that is putting the insured back to position he was before the loss occurred.
6. Subrogation: It is the right of one person having indemnified another under a legal obligation to do so, to stand in the place of other and avail himself of all the rights and remedies of the other whether already enforced or not. As far back as (1882) the principle was put forward that an insurer having indemnified a person was entitle to receive back from an insured the proceeds there form.
7. Contribution: It is the right of the insurer to all upon other insurers similarly but not necessarily equally liable to the same insured to share the cost of an indemnity payment the principle of contribution provides that if an object is insured with more than one insurance company, the amount claimable from individual radio able proportion of the loss.
2.4 NOTIFICATION OF CLAIMS
All policies contain conditions, which is the lay down procedures to be followed in the event of a loss, the insured is advised in his own interest to observe the conditions. It states that if a loss occurs, the notice should be in writing. The insured is usually required to give knowledge and to take all practicable steps to discover the property which has been lost in a burglary policy… notice to local agent is not necessary sufficient. It might require that the notice will send to the head office. It is not necessary that the notice should be his household or family can give the notice.
2.5 INVESTIGATION OF CLAIM
Checking for cover, claim investigation varies from one insurer to the other. It depends on the system each insurers adopts in its office. If a well organized insurance company noticed the loss or damage to his property, the following steps are usually taken.
1. The first step is to check through the records to ascertain that the policy number which the claim is quoting is the insured under the policy.
2. There should be a mortgage on the property so as to know who they will pay the proceeds.
3. That the peril or hazard which is said to have caused the loss should be the one covered by the policy.
4. That the policy is currently in force that is, the premium has been paid.
SCRUTINY: The claim form contains a schedule in which a description of each article lost damage must be interested with the same of the person from whom the article was paid or received.
2.6 CIRCUMSTANCES GIVING RISE TO CLAIM
In most large five and property claims after normal (insurance company). Investigation the insurer(s) has to satisfy themselves that one of the insured perils actually caused the damage or engineers to investigate property.
2.7 CLAIMS REPORT (ENGINEERS AND LOSS ADJUSTER)
Life Claims: A claim in a life policy may be either a death claim or a claim under “matured” endowment policy.
Death Claims: Conditions to be fulfilled by claimants to make claims valid are.
Proof a Death: The claim must have evidence of death the life assured and this would normally consist.
– A death certificate
– A declaration of identity unless age of the life assured had already been admitted in the policy.
Evidence of title: The claimant must prove that he is the person entitle to receive the proceed of the policy.
2.8 THE PROBLEM AFFECTING CLAIMS SETTLEMENT IN NIGERIA
Before we could have a through understanding of problems effecting effective claim settlement in Nigeria, it will be expedient to know what is involve in assessing claim.
Having received the premium, the insurer is able and willing to discharge his obligation under the contract. The effect of this is that, if in event of claim the property at risk is of greater value than the sum insured shall be considered to be self insured to the extent of the difference and thus been a ratable proportion of the problems hindering effective claim settlement some of which are listed below.
? Delay in notifying claims to insure
? Delay in supplying necessary claims supporting document by insured or brokers.
? Delay in submission of loss adjuster report.
? Fraudulent claims
? Litigation
? Effect of inflation on claim settlement
The problems of inflation are worldwide but to what extent does it affect insurance industries depending on the rate of inflation on the particular region and the measures taken by authorities to investigate it. It has also become common knowledge that during the period of depressed economic activities, fire burglary and cash losses become rampart and settlement of claims in respect of the consideration funds of the insurer, there by affecting the ability of setting claims promptly. A claim officer must always bear in mind that claims especially liability claims do no improve with time they turn to be expensive in ling run.
2.9 NEGOTIATION AN INSURANCE CLAIM SETTLEMENT
The first thing needs to do when getting ready to negotiate with an insurance adjuster is to have your facts straight. Have all of your information from the accident organized and easy to get to. Having your paperwork such as the police report from the accident, pictures of the damaged cars, pictures of your injuries and medical bills and reports readily available is essential.
Possessing all of these important documents is very helpful in your negotiating strategy. Having the information in form of you allows to be reminded of how exact things happened at the time of the accident. It also allows you to state certain dates and times specifically when one on the telephone with the insurance adjuster.
Many times the insurance adjuster will request copies of the documents you are referring to. Since you have for you to scan for emailing. Fax or even make copies to send through the postal service. By having your detailed information with you as you discuss the settlement with the insurance company it shows them that your are on the ball. It also shows that you are not a person to not taken advantage of.
Once you are past the trading of documents with the insurance company phase it should be time to do the actual negotiations. This is the time in which you put all your factual knowledge to work you also will begin working with the insurance adjuster for your case.
When the negotiation begins the insurance adjuster will most likely try to bully you. It will not necessary be in mean way but instead by intimidating you. The adjuster will speak about how long they have been in the business and how many settlements they have dealt with. They will compare your accident damages and injuries to other incidents that they have negotiated. Do not allow the adjuster to cover your into a low settlement amount. Your settlement should not be compared to other ones the adjuster has done. Let him or her know that upfront. You are not there to discuss other cases but your accident and injuries and how it has affected you.
You should have an ideal of the amount you want to settle for you should have researched how much the damage to the vehicle will cost to be repaired make sure you are getting good replacement pars and not used or junkyard pieces. The insurance company might want you to use a certain repair shop. Before agreeing to this check out the establishment and make sure it is some place you want working on your car. Most of the time it will be working on your car. Most of the time it will be a quality place the insurance company wants you to use but it is always best to make certain the shop has a good reputation.
A second part of your settlement will be in regards to repayment for the days off work you had to take. The paperwork from the company you work for should have the amount you are going to ask the insurance company to reimburse. If your company paid you by using your vacation, sick or other days off, you will still want the insurance company to reimburse you because you most certainly did not want to spend your vacation days recuperating from a car crash.
Finally probably the biggest part of your settlement will be concerning the injuries that were caused by the accident. You will need all of your medical records, bills and reports when negotiating the amount you will need to cover not only the current bills but any future medical expenses. It is always best to have the doctor write up something about your injuries and what further treatments you will possibly need.
To cover the pain and suffering that the accident injuries caused you, will also need to have an amount in mind that you will settle for. The amount that is, the norm for the settlement of pain and suffering is three times the medical bills. This is why it is so important to have all of your medical bills totaled up so that the pain and suffering amount will not be calculated too low.
If you go into negotiation regarding your insurance claim with the factual documentation organized you are already ahead of the game. Do not allow the insurance adjuster to intimate you. Stand up for what know you deserve. In the end, you should be able to negotiate with the insurance adjuster and get the settlement you are justified in receiving.
2.10 NEGOTIATING YOUR CAR ACCIDENT
After a car accident, if you have a claim with the negligent driver’s insurance company for either property damage to your vehicle, bodily or both, at some point, after providing the adjuster with all of the requested documentation, you will need to negotiate a settlement of your claim often, the adjuster will be the one to make the first more and offer you a settlement amount. If you have a definite opinion on the value of your claim, however, you don’t have to wait for his or her offer. You can write a demand utter with the figure you believe your claim is worth. (See settling your car insurance claim. How to write a demand letter). The adjuster will respond in due course with a counter-offer. If you come to an agreement on a figure- great. It’s settled. (See the initial steps in settling you car insurance claim).
Suppose, however, that the adjuster makes an offer much lower than you counted on (See when the adjuster’s offer is to low). Note that adjusters have a settlement range and will typically begin at the lowest figure. Their job is to settle the claim for the least possible amount of money you may venture into back-and-forth negotiations for a while, but no matter how long you have been negotiating, when he gets to the top of his range there will be no further offers, (See settling your car insurance claim: how long should it take). What happens if you reach an impasse? (See negotiating your car insurance settlement).
Here are some options to bring your claim closer to settlement, even if you have reached an impasse. They include the following:
a. Seek advice from a car accident layer to determine if the settlement amount you have in mind is a reasonable amount based on the facts and documentation.
b. If you want to continue negotiating on your own without an attorney, write a letter to the insurance company to support the value you have placed on your claim. You may want to include any additional documentation and or information not previously provided.
c. Go up the claim of command and speak to the adjuster’s supervisor or manager. Adjusters get their dollar authority to settle from their higher ups and may not have convinced them the claim is worth more than what is being offered. Perhaps you can convince them.
d. Request alternative dispute resolution (medication or arbitration)
e. File a complaint with your state’s (Department of insurance)
f. Hire an attorney to continue the negotiations for you: most people are not born negotiations.
If your car accident attorney reaches in impasses and is convinced your case has greater value than the insurance company is assigning it, that’s when you file a lawsuit against the negligent driver to have court decide.
Not that if you are having trouble resolving a claim with your own insurance company for example, an uninsured motorist claim or a collision claim where your vehicle was deemed a total loss, you also have options you may not only file a complaint with the department of insurance. But you may sue your insurance company for bad faith (See when you can’t resolve a dispute with the insurance company). Be sure to hire an attorney who is well versed in the insurance bad faith cases.
POLICY COVERAGE
For motor insurance, either there is party policy or package policy. In case of third party insurance the policy covers the vehicle owner’s legal liability to pay compensation for the third party. Damage to your car will not be borne by the company. Third party insurance is mandatory for all vehicles.
If your car is fully insured, then along with the damage to third party, the package policy would cover loss or damage to the insured vehicle and its accessories as well. The loss may be due to any accident like fire-explosion, self-ignition or lighting, burglary, theft, riot and strike etc. The package policy is not mandatory, though experts recommend it strongly.
Exclusions: All of us know what the insurance policy covers is but not many of us know about its exclusions.
Firstly, there is a compulsory deduction that is made when you claim the loss amount for example IFECO TOKIO deducts RS 500 when a claim is made. This amount differs from company to company and exclusions under the package policies include wear and tear, breakdowns, consequential loss and many move.
However, the most important exclusion and the one that affected Vazirani’s claim is the damage to tyres, tubes and other nylon, glass and plastic accessories. Damage to tyres and tubes is not paid for, unless the entire vehicle is damaged at the same time of accident. Liability is limited to 50% of the cost of replacement.
“Same is the case with any nylon, plastic parts, battery and air bags. For fibre glass components, the company pays only 30% of the cost” says the spokesperson of Bajaj Allianz General Insurance. Vaziran has to pay for the plastic door handle, tail lights that include the break lights as well as indicator. He did not know the company does not pay for all the parts made of glass and he had to pay for that too.
Also 50% was deducted on all the steel parts. This in itself, was a big cost that he had to shell out, in spite of getting his car fully insured. Plus, there was a 10% rate of depreciation for all the other parts including wooden parts, since his car was more than a year old. Insurance companies attribute this deduction to the rules and regulations that have been laid down by the motor tariff.
Officials from Bajaj Allianz say that the motor tariff was made after a lot of research on the kind of claims the companies were getting. Products like tyres, batteries and so on are used every day and a depreciation value is attached to it. Therefore, it is extremely important that you read your offer document carefully and be aware of all the hidden clauses like this one.
Along with all these, there are also few details given by V. Ramakrishna, managing director, India insure Risk Management Services Pvt, Ltd, which the owner of the vehicle must take care of:
a. If an insurance company decides to take a spot survey they do not move your vehicle from accident sport till survey gets completed.
b. All replaced parts should be kept for inspection by surveyors and should not be disposed of bill the surveyor gives approval for the same.
c. Do not take any action for damaged vehicle before prior-approval of insurance company or surveyor like repairs, movement of vehicle etc.
d. Never enter into a compromise or make an out-of-court settlement with the injured or legal heirs of the deceased without the consent of the insurers. These compromises or out of court settlement are not payable in terms of insurance policy.
e. Documents to be deposited with insurers include original bill of repairs or replacements, cash memo payment proof, etc for finalization/disposal of claim by the insurance company.
f. Submission of Xerox copies of bills/invoices paid is not accepted. Original bills are required to be submitted to insurance company.
g. On approval of claim, arrange to deposit/salvage the damaged parts with the insurers failing which they may deduct the salvage value from the claim amount.
h. Provide co-operation to the advocate deputed by the insurance company.
TO SUM UP
One has to be very careful while making a claim and should also be prepared to shell out a good amount from his pocket as well. The owner of the vehicle should be aware of all the terms and hidden costs, which Vaziran did not know that it led to nothing but disappointment.
2.11 HOW TO CLAIM LIFE INSURANCE SETTLEMENTS
When there is an unforeseen death, there are a few things that need to be done prior t claiming the life insurance settlement. This is important to be aware of as you may not have much time before you need the money in order to handle accommodations. There can be variance on the terms of the payout and the specific requirements for making the life insurance claim so, it is best to have an understanding of this ahead of time.
DIFFICULTY: Moderate
Instructions are as follows
1. Contact the life insurance company or the broker who issued the policy. They can help you to fill out all the necessary paperwork in order to make the claim. It’s not necessary important that this must be done by the direct beneficiary of the life assurance settlement, who ever that person will need to be available to validate the claim and receive insurance of the payment.
2. Check the resources section below for a resource if you do not know who the life insurance company is. This will slow the process of the life insurance settlement significantly.
3. Collect the death certificate from the coroner’s office or from the funeral director. Submit a copy of the certificate for each life insurance policy you are making of claim for. Do not submit your original or you may need to obtain a new one each time it needs to be provided. Typically copies do not need to be notarized for this purpose, but under special circumstance this may be required.
4. Talk with the insurance company about the settlement so that you will understand the payout. Some life insurance settlement payout over a long period of time, while others pay our in a lump sum. These terms can often be altered depending on the need. It’s best to make this accommodation as soon as possible.
5. Once all of the accommodations have been arranged and there is a payout agreement submits all the forms along with the death certificate to the life insurance company in order to claim the life insurance settlement. In general the payout period should be short as they understand that the money needs to be readily available in order to make accommodations for the deceased.
REFERENCES
Victor .I. Okonkwo (2002:10, 105) Introduction to Insurance in Nigeria Prospective pg 20-25.
Adesida E.O (1999:175) Improving Insurance Image among the populace pg 10-12.
Iruku, J.O. (1999:56) Insurance Practice in Nigeria pg. 12-1.
Agwu, Akpak (1989) Management an Introduction and the Nigeria Perspective, Department of Management University of Nigeria Enugu Campus p.2 Federal Might, NICON Vol. 2 No.10, 1988.
Wilson J.B. Herbert Taylor Insurance Administration pg. 296.
CHAPTER THREE
3.1 RESEARCH METHODOLOGY
This chapter focuses on the various methods, which the researcher will use in collecting and analyzing the necessary data for the study.
The methodology of this is arranged in the following heading-:
i Research design.
ii. Methods and sources of data collection.
ii. Research population.
iv. Sample and sampling technique.
v. Questionnaire design.
vi. Data analysis.
3.2 RESEARCH DESIGN
Research design is a method of proof that allows the researcher to draw inference concerning casual relation among the variable under investigation.(Nachimias and Nachimias, guated in baridam 1995) pp.49. As a result of the nature of the study the researcher will adopt the questionnaire method.
3.3 METHODS AND SOURCES OF DATA
There are two main soured of data namely: primary sources and secondary sources.
The primary data will comprise those generated from information that was got from the questionnaire. While the secondary data comprise of those generate form relate material that have been in existence. These include: textbook,
Company journals /magazines and monographs.
The research instruments used for data collection in the study were questionnaire were administered to those that can supply the relevant information to this study. Among those given the questionnaires were managers, supervisors and workers.
The secondary data for the research were collected through the extensive use of some library materials company journals and magazines.
3.4 POPULATION
For the purpose of this study, some staff of NICON Insurance Company, Enugu were used as the population size .This population includes people from the following departments.
i. Human resource department: this is responsible for the recruitment and training of employees. Their population is twenty nine (29).
ii. Engineering department: responsible for the maintenance of machines and equipment with the population of twenty three (23) staff.
iii. Finance / accounting department: this department has a total number of twenty (20) staff and it is responsible for paying salaries and releasing funds for the purchase of raw –materials and other necessary equipment.
i. Human Resources Department: This is responsible for the recruitment and training of employees. Their population is twenty nine (29).
ii. Engineering department with the maintenance of machine and equipment with the population of twenty three (23) staff.
iii. Finance/Accounting Department-: this department has a total number of twenty (20) staff and it is responsible for paying salaries and releasing funds for the purchase of raw materials and other necessary equipment.
iv. Quality control department-: this department has a population of sixteen (16) staff and is responsible for ensuring effective quality control practice and maintenance and the application of quality control technique.
v. Technical laboratory Department -: this is responsible for testing raw- material and chemical used in production. It has a population size of eighteen (18).
vi. Brewing Department-: This department is responsible for mixing and blending raw- materials for brewing beer and malt drink. It has a population
The total population of the six departments is therefore one hundred and twenty five (125) personnel.
3.5 SAMPLE SIZE
N = N
1 + N (e) 2
N = 125
1+125(0.5) 2
125
1+125(0.0025)
125
1+0.3125
125
1.3125
N = 95
3.6 SAMPLE AND SAMPLING TECHNIQUE
The researcher will use sample size of one hundred respondent from the re search population of one hundred and twenty five (125) staff.
3.7 INSTRUMENT FOR DATA COLLECTION
The open-ended (unstructured) question allow the respondents to make brief comment were necessary while the close-ended (structure) question allow the respondent to only tick ‘yes’ or ‘no’ where appropriate or choose from a number of option.
The questionnaires consist of structure and have both open-ended (unstructured) and close-ended (structured) question.
3.8 DATA ANALYSIS METHOD
The data collected will be analysed using the simple percentage method of data analysis. This method the degree of percentage of response to question in the questionnaire.
CHAPTERFOUR
DATA PERSENTATION AND ANALYSIS
4.1 INTRODUCTION
This chapter deals with the presentation and analysis of data, Analysis in this research work involved the ordering and breaking down of data using sample presentation is done in tabular form.
Sample percentage = Number of respondents x100
Number of questionnaires distributed
NICON Insurance Company, which includes the following:
Insurance of Life
Insurance Property
Questionnaires were distribution to some of NICON Insurance Company personnel across different department in the firm in order to know what quality control practice is like in the firm, the problems, the firm encounter in practice and what it seeks to achieve through this practice.
4.2 GENERAL ANALYSIS OF QUESTIONNAIRES DISTRIBUTED
A total number of ninety-five(95) questionnaire were distributed and collected.
TABLE 4.2 PATTERN OF DISTISBUTION
Position of individuals
In the firm No
Distributed No
Returned
Percentage
Manager
10 10 20
Supervisor 30 30 32
Worker 35 55 48
Total 95 95 100%
Source: Research data 2013
From the above a total number of ninety-fine (950 questionnaires were distributed to managers in different department in the firm including the quality control department. Thirty (30) questionnaires were distributed among thirty (30) supervisors, 10 were distributed to top manager. While the remaining fifty-five (55) were distributed among the worker.
TABLE 4.2.2: QUALITY STANDARD ESTABLISHMENT
QUESTION: What factor does your firm consider most important in production?
Opinion No of Respondent Percentage
Customer satisfaction 92 97
Management satisfaction _ _
Profit 3 3%
Total 95 100
Source: research data 2013
From the above data it was discovered that Nigerian breweries plc Eungu consider all the above mentioned factor but much emphasis is laid on customers satisfaction as 92 respondent representing 97 indicated while the factors are considered. For an organization to grow and succeed it must lay much emphasis consideration on customers satisfaction because it is the only factor that can lead to profit maximization or optionization.
Question 3
Does your firm apply quality control techniques
Opinion No of respondent Percentage
Yes 95 100%
No – –
Total 95
Source: Research data 2013
All the ninety five (95) respondent agree that NICON Insurance Company, Enugu applies control techniques.
Question 4
If answer to the question is yes, what method does your firm use?
TABLE 4.2 4
Opinion No of respondent Percentage
Quality 10 17%
Statistical 10 11%
Inspection 11 17%
Control charts 9 4%
All of the above 55 57%
Total 95 100%
Source: Research data 2013
According to the data 10 respondents representing indicate that the firm use only quality circle another 10 Respondents representing 11% indicated statistically techniques 11 Respondent Representing 17% indicated inspection only, 9 respondents said control chart only while 55 Respondent mentioned quality control techniques.
This shows that NICON Insurance Company, Enugu through uses all the above-mentioned techniques; it makes use of control charts and inspection.
QESTION 5
Whose responsibility it is to establish quality standard in firm?
Table 4. 2. 5
OPINION NO OF
RESPONDENT PERCENTAGE
Board of directors – –
TOP management 50 52%
Quality control manger 45 48%
Supervisors – –
Workers – –
Total 95 100%
Source: research data 2013
50 respondents with the above data indicated that the firm’s quality standard is the responsibility of the top management, which the remaining 45 said it is the duty of the control manger. This shows that some staff in the firm do not know whose responsibility it is to establish quality standard. It also shows that the top management and quality control mangers are involved in the establishment of quality standard in the firm.
QUESTION 6.
Whose responsibility is it to ensure that service quality conforms to firms
Specification?
TABLE 4.2. 6
Opinion No of respondents Percentage
Manager 28 30%
Supervisors 22 24%
Workers 10 11%
Everybody 35 35%
Total 95 100%
Source; research data 2013
Data reveals that 28 respondents representing 30% agreed that the duty of the managers to ensure conformance. 22 said it is the duty of the supervisors, 10 said it is responsibility of the workers while 35 respondents said it is the responsibility of everybody.
For any manufacturing firm to succeed, it must make a products conformance to specification the sole responsibility of everybody from the inability of everybody from the highest to lowest staff because quality is everyone’s business.
QUESTION 7:
Does the quality of your firm’s service conform to firm specification?
TABLE 4.2.7
Opinion No of respondents Percentage
Yes 95 100%
No – –
TOTAL 95 100%
SOURCE: RESEARCH DATA 2013
All the one hundred (100) respondents indicated that their firm’s service confirm to firms specification.
QUESTION 8.
IF yes to the above question is the current practice enough to ensure high quality service?
TABLE 4.2.8
Opinion No of respondents Percentage
Yes 95 100%
No – –
TOTAL 95 100%
Source: research data 2013
TO the above research question, 95respondents, which represent 100%, touched “yes” indicating that the current quality control practice in the firm ensures the production of high quality product.
QUESTION 9.
How does the quality of service firm’s compare with international standard?
TABLE 4.2. 9
Opinion No of respondents Percentage
As good as international standard. 95
100%
Not as good as international standard – –
Better than international standard – –
TOTAL 95 100%
SOURCE: RESEARCH DATA 2013
Here, all the 95 respondents, representing 100% shows that the qualities of the NICON Insurance Company, Enugu service are as good as international standard services.
QUESTION 10.
. What problems militate against quality control practice in your firm?
TABLE 4.2.9.
OPINIONS No of respondents Percentage
Cost of application – –
Poor equipment 20 22%
Management attitude
Negligence all of the above 75 78%
Total 95 100%
SOURCE: RESEARCH DATA 2013
75 respondents indicated that negligence on the part of those concerned is one of the problems the firm encounters while 20 respondents representing 22% said poor equipments. In addition to these opinions, some respondents added that carelessness and sometimes use of industrial’ attaches’ who are not qualified also constitutes problems to the firms quality control.
QUESTION 11
Does individual trainings in quality control practice affect their commitment to quality control in your firm ?
TABLE 4.2.11
Opinion No of respondents Percentage
Yes 95 100%
No – –
TOTAL 95 100%
SOURCE: RESEARCH DATA 2013
ALL the ninety five (95) respondents agreed that training individual workers in quality control practice makes them to get committed achieving the goals of the firm.
4.3 TESTING OF HYPOTHESIS
Ho: The effect of unsettled claim has no significant impact on profit maximization in insurance industry.
H1: The effect of unsettled claim has significant impact on profit maximization in insurance industry.
Ho: The cause of disputes among the insurer and the insured on claim has not significant impact on settlement in insurance industry.
H1: The cause of disputes among the insurer and the insured on claim has not significant impact on settlement in insurance industry.
Ho: The effect of claim settlement on profit maximization on the side of policyholders in case of default and on the uneducated has not significant impact on public.
H1: The effect of claim settlement on profit maximization on the side of policyholders in case of default and on the uneducated has significant impact on public.
Ho: The effect of claim concerning third party insurance and profit maximization has not significant impact on insurance company.
H1: The effect of claim concerning third party insurance and profit maximization has significant impact on insurance company.
Ho: The effect of prompt settlement claims on profit maximization in insurance industry has not significant impact on the Company.
H1: The effect of prompt settlement claims on profit maximization in insurance industry has not significant impact on the company.
CHAPTER FIVE
CONCLUSION AND RECOMMENDATION
5.1 CONCLUSION
From the analysis done by writers Brokers (2004:45) which shows the various problems encountered by the company in the view of providing profit and maximizing it to the interest of claim settled as when due underwriting and claim administration has reflected to a considerable extent to low level of awareness of the insuring public still view insurance companies as a form of serving rather than means of protection.
Also indemnity was the problem of adjustment and procrastination at Nigeria high courts in relation to the processing of necessary documents but is important in the claim settlement process. The company’s organizational structure has not enquired the company’s ability to settle a shareholders and clients obligation it is well arranged and has not created a significant bottleneck in the claim process but however, the problems of inadequate communication which at times causes delay should be looked into. Also noticed was at increase in general trend in claim by the company’s policyholder and the outcry of the neglect by shareholders as indicated by that rate at which claims are increasing is far greater than the rate of growth of items that can easily provide a cushion for it finally, if the company can pay special attention to their investors taking the pain to explain how insurance contract is being done and maintained and efficient underwriting and claim settlement will be a thing of ease and joy towards the parties concerned.
5.2 RECOMMENDATIONS
According to Irukwu J.O. (1999:56) who based on what the research findings the following recommendations are suggested in order not only to improve the performance, of servings trust insurance company limited but, to improve the entire insurance industry in Nigeria. They are as follows:
1. Educating the insuring public will go a long way in solving the problem encountered by insurance in attempt to ensure efficient underwriting and prompt settlement of claims and profit maximization of the company.
2. The insurance industry as a whole should try and set up committee to look into common problem associated to insurance companies and their shareholder and settlement of claim with aim view of finding solution to them.
3. Above all will recommend that efficient handling and settlement of claims promptly will in the short run reduce the level of profitability but in the long run, the insurer will earn a reputation for himself from the insuring public have high business turnover, continually increasing gross premium income raising invisible income and thus substantial profit generation. Thus, it will show that, the efficient claim administration is necessary in any insurance company, it should not be assured that will settle claims, there would be a consequent reduction in profitability.
BIBLIOGRAPHY
Adesia E.O. (1999) Improving Insurance Image among the populace
pg. 10.
Ajala M.O. (2001) The effect of delayed settlement claim on the socio-
economic development of a nation pg. 35.
Irukwu J.O. (1999) Insurance Practice in Nigeria pg. 22.
Laward S.A.F (2003) Effective claim management problem and prospects
pg. 40.
Willis Park Rokes (2000) Human Relationship Handling Insurance claim
pg.19.
Willer, Buokes (2004) Insurance Management Claim pg. 15.
QUESTIONNAIRES
Department of Insurance
Institute of Management and
Technology (IMT), Enugu
P.M.B 01079
Enugu
1st October, 2013
Dear Respondent,
I am a H N D 1, student of the aforementioned department and institution, I am carrying out a research on the topic “The Effect of claim settlement on profit Maximization in the Insurance Industries (A Case Study of NICON Insurance Company”).
I am carrying out this research in partial fulfillment of the requirement for the award of Higher National Diploma in Insurance Department.
I therefore, implore your co-operation and truthfulness in filling this questionnaire as the information supplied will be treated with strict confidence.
Thank you very much.
Yours faithfully,
Nwankwo LadyAnn .C.
IMT/INS/H2012/067
INSTRUCTION
Mark (? ) in the appropriate box provided for you below:
1. Sex: Male Female
2. Age: a. 17-27yrs b. 28-38yrs
c. 39yrs and above
3. Level of Education
a. No education b. FLSC
c. WASC d. NCE/OND
e. HND/1st Degree and above
4. What is the name of your company?
…………………………………………………………………………..
5. What is your position in this company?
a. Director b. Manager
c. Staff d. Cleaner
6. How many people have ever reported claim?
a. 10 people b. 13 people
d. 15 people c. 20 people
e. None of above
7. How many people did your company pay claim?
a. 5 people b. 15 people
c. 20 people d. I don’t know
8. How many did they refuse to pay claim?
a. 4 b. 8 c. 15
d. All of the above e. I don’t know
9. Why did your company refused to pay their claim?
a. Lack of notification b. The actual cause of the injury is not within the scope of the policy.
c. Lack of disclosure of material facts
10. Have your company had any disputes?
a. Yes b. No
c. I don’t know
11. What caused the dispute in your company?
a. Lack of communication
b. None payment of premium
c. Inadequate payment of claims to the insured
d. All of the above e. No idea
12. What is the effect of unsettled claim on profit maximization in your insurance company?
a. Bad image to the company
b. No profit realization
c. I don’t know
13. What is your opinion on effect of prompt settlement claims on profit maximization in your insurance company?
……………………………………………………………………..
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