Risk Underwriting's Impact on the Profitability of Insurance Firms: The NICON Case
Abstract
The impact of underwriting risk on the National Insurance Corporation of Nigeria (NICON) profitability was investigated in this study. NICON Insurance Limited appeared to have additional challenges in its risk underwriting process due to emerging hazards, which could negatively impact profits if improperly assessed. Data was drawn from NICON Insurance Limited’s 2004– 2024 Audited Financial Statement Reports. The research design employed in this study was ex post facto, and data were analysed using descriptive and inferential statistics. The hypotheses of the study were tested using ordinary least squares regression. Findings showed that while total claims paid had no apparent effect on Return on Assets (ROA), total assets, underwriting risk, and premium income all significantly increased NICON’s profitabilsity. It was determined that underwriting risk had a favourable and substantial impact on NICON’s profitability. NICON Insurance Limited should develop an efficient investigation strategy for reported claims with cross-confirmation mechanisms to authenticate claim reports prior to payment or denial, as well as improve its claim payment methods and lessen the impact of underwriting risk, such as the amount of losses. For long-term profitability, the excess premium revenue following claim payouts ought to be reinvested. To increase profitability, asset and liability management must be done well. To prevent catastrophic losses that could certainly harm NICON’s profitability, it is necessary to properly assess underwriting risks and the company’s capacity to retain risk during the underwriting process.
Author
- Mfon N. U. Akpan
Department of Insurance & Risk Management
University of Uyo, Nigeria
Email: mfonnuakpan@uniuyo.edu.ng