EFFECT OF REGULATORY INSTRUMENTS ON FINANCIAL PERFORMANCE OF INSURANCE FIRMS IN NIGERIA
Sukana, Danjuma Tusha, PhD and Eneche, Friday Sunday, PhD
Volume 4 Issue 2
Abstract
This study investigated the effect of regulatory instruments on financial performance of insurance firms in Nigeria. While claims reserves and operational risk management were used as the proxies for regulatory instruments, financial performance was measured by return on assets. The study adopted ex-post facto research design. The sample of the study constituted 15 insurance companies listed on the Nigerian Exchange for the periods of 2015-2024. Based on the outcome of the Hausman specification test, the study adopted the Random effect regression model. The results from the analysis revealed that both claims reserves and operational risk management had a positive and significant effect on financial performance of insurance firms in Nigeria. The study concluded that the two regulatory instruments used in the study have a positive and significant effect on financial performance of insurance firms in Nigeria for the period studied. The study recommended that the NAICOM should mandate insurance firms to set aside a sum not less than ten percent of the premium paid on each insurance policy as claims reserves. The study also recommended that the NAICOM should mandate all insurance firms to fully integrate operational risk management (ORM) into enterprise risk management (ERM). Keywords: Regulatory Instruments, Claims Reserves, Operational Risk Management, Financial Performance
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