REINSURANCE UTILISATION AND DEPENDENCE ON THE FINANCIAL PERFORMANCE OF NON-LIFE INSURERS: EVIDENCE FROM NIGERIA

Francis Sewhenu Dansu; Adebayo Obalola

doi:10.29358/sceco.v0i28.428

REINSURANCE UTILISATION AND DEPENDENCE ON THE FINANCIAL PERFORMANCE OF NON-LIFE INSURERS: EVIDENCE FROM NIGERIA

Authors

Francis Sewhenu Dansu Lagos State University, Lagos, Nigeria
Adebayo Obalola

DOI:

https://doi.org/10.29358/sceco.v0i28.428

Keywords:

Financial performance, loss ratio, premium growth rate, primary insurers, reinsurance

Abstract

Reinsurance is used by primary insurers as a device to cushion the effect of underwriting and solvency risks. However, an overdependence on reinsurance could cause depletion in the income of the primary insurer. The study examined the effect of reinsurance on the financial performance of non-life insurers in Nigeria. Secondary data used for this research were analysed with descriptive statistics, coefficient of determination (R2), and linear regression. Results showed a significant positive relationship between reinsurance utilisation and premium growth rate. Similarly, a significant positive relationship was found between reinsurance dependence and profitability (loss ratio). It was recommended that non-life insurers should embrace more of reinsurance facilities particularly for risks of high loss potentials in order to stabilise premium growth rate. In addition, Insurance firms in Nigeria should harness their claims management activities in order to minimise cost and exposure to underwriting risks.

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Author Biography

Francis Sewhenu Dansu, Lagos State University, Lagos, Nigeria

Lecturer

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Additional Files

Supplementary File to Reinsurance Paper

Published

30.12.2018

Issue

No. 28 (2018)

Section

Articles

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How to Cite

Dansu, F. S., & Obalola, A. (2018). REINSURANCE UTILISATION AND DEPENDENCE ON THE FINANCIAL PERFORMANCE OF NON-LIFE INSURERS: EVIDENCE FROM NIGERIA. Studies and Scientific Researches. Economics Edition, 28. https://doi.org/10.29358/sceco.v0i28.428