University of Liverpool Nigeria Non-Life Insurance Market Essay

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Business Finance

University of Liverpool


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Written Report on (NIGERIA NON-LIFE INSURANCE MARKET) 1500 WORDS Suppose, you are an insurance consultant with expertise in the analysis of strategic insurance issues in the non-life insurance market of your choice. Furthermore, assume that one of the objectives of the insurance regulator in your home country is to facilitate effective competition. • To that end, the regulator has appointed you to produce a research-based report with a focus on the strategic performance and competitiveness of your chosen non-life insurance market. In preparing your report, you should, inter alia, comment on historical KPIs and use an appropriate analytical tool to measure the competitiveness of this specific non-life insurance market. Furthermore, you should comment on the growth potential in this non-life market with the help of appropriate macro-economic variables. FOCUS OF THE REPORT SHOULD INCLUDE: • Analytical tool: You should choose only one analytical tool which you think is most appropriate for this coursework and for which academic or professional literature is available • Analysis (historical and current): With the help of the above-mentioned variables you should be able to provide a succinct analysis of the current state of your chosen non-life market. • Analysis (prospective): Based on your analysis of the current state of the non-life market you should be able to conclude on the growth prospective of this market. • fully referenced in line with Harvard in text - full reference list in line with Harvard presented at the end 1500 WORDS
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Nigeria Non-Life Insurance Market
The purpose of this research paper is to understand the various factors or variables
which affect the strategic performance and competitiveness of non-life insurance markets in
Historical performance KPIs will also be analyzed to understand the current state of
the non-life insurance market and prospective growth opportunities for the market. The
governing authority for Insurance companies in Nigeria is National Insurance Commission
(NAICOM). It was founded in 1997.
The non-life insurance market relates to the industry of a country for non-life
insurances. Non-life insurance is the insurance coverage for the financial losses to
automobiles, homes, and other properties due to damage, or other natural disasters. It is also
called General Insurance.
The insurance policies are related to the provision of safety and coverage from
various risks faced by the policyholders. So, it is also important the level of risk in a specific
country to understand the current and potential market for non-life insurance. In other words,
it is a method to transfer the risk of an entity to another entity, the insurance company, in
return for the insurance premium.
The strategic performance and competitiveness of the non-life insurance markets
depend upon various factors or variables. One factor or variable that is deeply related to the
market’s strategic performance is the risk factor. What is the country’s risk situation is very
important to understand the performance of the non-life insurance market.
Generally, it can be said that the non-life insurance market will prosper and grow
more in a country with a high-risk profile as compared to other countries. But not all the
risks contribute to the prosperity of markets, some have an inverse proportion to it as well.

Another factor that is important in this regard, is the willingness of the businesses and
individuals to tolerate those risks or transfer those risks to the insurance companies.
There are multiple risks which that should be evaluated for this purpose. One risk is
business risk. The business risk is that the company will not be able to deliver or operate
successfully and will generate losses instead of profits. This risk will be specifically related to
business organizations.
Because the companies in a country will not be able to generate profits, they will be
scared of high losses from damage or other accidental events and will therefore buy insurance
policies to transfer their risk to the insurance companies. And it will ultimately increase the
market for non-life insurance.
Another risk is the political risk or country-related risk. This risk is related to both
individuals and businesses. It is the risk that a business will not perform effectively and
successfully due to the unstable political or economic conditions of the country. And as this
risk will increase in the surrounding work or business environment of the company, the
company’s ability to tolerate risks will decrease and will be more willing to transfer those
risks to insurance companies.
Then comes the liquidity risk. It is the risk that the overall ability of companies in a
country will decrease and the company will fail to pay its short-term and long-term financial
obligations. Some businesses or individuals are less likely to buy insurance policies due to
the unavailability of sufficient funds to pay for insurance premiums.
But others may feel it safe to take insurance coverage in such a situation to avoid any
significant financial losses in case of damage. Again, it depends upon the organization and is
specific to the risk tolerance of each business or individual.

The above risk factors or performance variables lead to the other variable for the
evaluation of strategic performance and competitiveness of non-life insurance markets. That
factor is the interest of various stakeholders for non-life insurance.
The strategic performance and competitiveness of the non-life insurance markets
highly depend upon the interest of various stakeholders. These stakeholders include
management, shareholders, current and prospective policyholders, creditors, and governing or
regulatory authority for the non-life insurances in that country. (Andoh&Yamoah, 2021)
The interests of these stakeholders change as per the previous variable of risk. So, it
can be said that as the risk pro...

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