Purpose: This chapter is based on risk management of the insurance sector with reinsurance as its linchpin. Such is the importance of the insurance sector that its risk management…
Abstract
Purpose: This chapter is based on risk management of the insurance sector with reinsurance as its linchpin. Such is the importance of the insurance sector that its risk management must be considered.
Need for the study: Risk management of various sectors is gaining much attention. The insurance sector, known to manage the risk of multiple sectors, also requires its own chance to be controlled with the same or even more intensity. Considering the importance of reinsurance coupled with the dependency of primary insurers on reinsurers and the absence of research on reinsurers, the need to conduct a comprehensive study on the topic is felt.
Methodology: It will be a conceptual chapter based on the rigorous literature on the topic integrated with the researcher’s insights to bring forth the framework of reinsurers for the readers.
Findings: It is found that insurers can themselves become the victims of the financial crisis in case they insure risks that surpass their economic boundaries. Not only this, the failure of insurance companies can have a ripple effect on the country’s economy. Therefore, insurers must possess financial resilience; to remain so, they need to have prudent management of the risk they are undertaking.
Practical implications: The study covers a relatively less researched area of reinsurance and hence has a vast scope of research in the future. The study would be helpful to stakeholders like regulators and primary insurers. It will unveil the paradigm of reinsurance and enlighten the stakeholders on how to use it effectively.
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S.A. Aduloju, A.O. Odugbesan and S.A. Oke
Characterized by declining goodwill and exemplified sharp drop in gross premium, the Nigerian insurance industry, in recent times, has experienced turbulent economic challenges…
Abstract
Purpose
Characterized by declining goodwill and exemplified sharp drop in gross premium, the Nigerian insurance industry, in recent times, has experienced turbulent economic challenges that necessitated re‐engineering of its core activities. However, advertising and sales are core activities, which are important predictors of stability and growth in the insurance industry. Consequently, the purpose of this paper is to examine the impact of advertising on sales of insurance products.
Design/methodology/approach
An empirical investigation is carried out using a survey that utilizes questionnaires, interviews, and field observation as major research instruments. A total of 71 insurance companies in Nigeria, which represent the total operating insurance companies in Nigeria at the time of study, were surveyed. With 100 scientifically selected subjects sampled, descriptive analysis was employed to understand the relationship and the strength of such relationships.
Findings
It was found that advertising had effects on sales volume and improved public image. However, the choice of advertising medium, the message, and the format are critical ingredients of a successful advertising program in the insurance industry.
Research limitations/implications
The insurance industry in Nigeria was studied from a holistic viewpoint due to the need to present reliable and detailed information for decision makers. However, limitation in achieving this relates to the reluctance of respondents to release information for the study.
Practical implications
The implication of this research is that proper control of advertisement budget vis‐à‐vis the expected sales volume could be made. Thus, organizations could spend budgets more effectively on growth enhancing projects instead of excessive wastage of funds on advertisement.
Originality/value
This paper seems to be the first original work that concerns the impact of advertising on sales in the Nigerian insurance industry. As such, it bridges a gap that is opened for investigations. It may be of great value to decision making seeking for control tools.
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S.A. Aduloju, A.L. Awoponle and S.A. Oke
Recapitalization, mergers, and acquisitions are the most crucial issues confronting the Nigerian Insurance Industry (NII) in recent times. Yet information relating to these issues…
Abstract
Purpose
Recapitalization, mergers, and acquisitions are the most crucial issues confronting the Nigerian Insurance Industry (NII) in recent times. Yet information relating to these issues is rarely reported in print. The purpose of this paper is to present the results of a survey aimed at understanding the challenges faced within the NII and the reactions of the insurance underwriters towards the recapitalization exercise in Nigeria.
Design/methodology/approach
Stratified sampling was applied in segregating listed insurance companies on the Nigeria Stock Exchange into top‐, middle‐, and lower‐management cadres. Random sampling was then used in selecting samples of the insurance company's staff. A questionnaire containing both open‐ended and closed‐form questions was used as the instrument to collect the primary data. Questionnaire administration was combined with personal interviews and record viewing in gathering relevant facts for use. Fifty‐four questionnaires were properly filled and returned from members of staff of the selected insurance companies. Chi‐square statistical procedures revealed the true position of the issues raised in the hypotheses.
Findings
Recapitalization has been enhancing the development of the insurance industry and mergers and acquisitions have remained viable options for companies to remain in business.
Research limitations/implications
Limited financial and non‐financial resources, as well as a reluctance to release information by insurance companies and other operators in the industry, prevented further investigation.
Originality/value
The study serves as an information source for investors in the insurance industry.
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Folake Olowokudejo, S.A. Aduloju and S.A. Oke
The purpose of this paper is to present a theoretical and empirical relationship between corporate social responsibility (CSR) and some dimensions of organizational effectiveness…
Abstract
Purpose
The purpose of this paper is to present a theoretical and empirical relationship between corporate social responsibility (CSR) and some dimensions of organizational effectiveness (OE) of insurance companies in Nigeria.
Design/methodology/approach
Data were obtained from a field survey in insurance companies in Lagos using structured questionnaires. Responses from the survey were statistically analyzed using descriptive statistics and Pearson product moment correlation.
Findings
Results of the study indicated that insurance companies are involved in all four forms of CSR activities (business ethics, urban affairs, consumer affairs and environmental affairs) with consumer affairs receiving the most active involvement. The study indicated that OE of the participating insurance companies is to a large extent satisfactory. However, involvement in CSR was found to correlate positively with OE.
Research limitations/implications
The study also indicated that insurance companies still suffer from the lack of awareness, unavailability of information to identify the needs of a developing society, lack of qualified workforce and adverse economic factors that prevent them from performing CSR activities.
Originality/value
From a practical perspective, the study is needed to assess if investments in CSR is worthwhile or not.
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Nurudeen Babatunde Bamiro, Zainizam Zakariya, Lukman Raimi and Yoburaj Thomas
Recognizing economic literacy as a vital form of intellectual capital provides essential tools to mitigate the adverse impact of risk factors on business organizations'…
Abstract
Purpose
Recognizing economic literacy as a vital form of intellectual capital provides essential tools to mitigate the adverse impact of risk factors on business organizations' performance. This recognition serves as a strong rationale for prioritizing economic literacy as a strategic asset in navigating the complexities of risk factors for sustained organizational performance. To bridge this gap, this study examines the role of risk factors in the economic literacy of an organization and how they affect organizational performance.
Design/methodology/approach
This exploratory study employed a qualitative research method, utilizing a systematic review with the Preferred Reporting Items for Systematic Reviews and Meta-Analyses (PRISMA) approach to identify gaps. A comprehensive search across databases was conducted using keywords related to risks, economic literacy and organizational performance. In total, 32 articles were meticulously analyzed, focusing on methodology, results and discussion sections to address research questions.
Findings
This study highlights the impact of risk factors on economic literacy and organizational performance, focusing on risk-taking, attitude, enterprise risk management (ERM), financial literacy and organizational performance. It reveals that possessing economic literacy can mitigate financial risks in corporations by helping entrepreneurs identify business opportunities and pitfalls, enabling informed and prudent financial decision-making. Conflicting findings challenge existing knowledge on the link between risk factors and financial literacy, particularly in new product development decisions, highlighting the need for further investigation into environmental factors shaping this connection.
Originality/value
The study developed a conceptual model that explains the interaction among economic literacy, risk factor and organization performance, which has implications for the development of the required intellectual capital to mitigate the impact of risk factors. Also, the study identified diverse conceptual, methodological and geographical gaps that will provide direction for future studies. Future research could delve into firm-level or cross-country data via surveys, interviews or focus groups, enriching the research's robustness and depth for nuanced insights into the investigated relationships.
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Harish Kumar Singla and Milind Phadtare
The study is an attempt to find the major risks faced by Micro, Small and Medium Enterprises (MSMEs) engaged in construction business in India. Further, the study attempts to find…
Abstract
Purpose
The study is an attempt to find the major risks faced by Micro, Small and Medium Enterprises (MSMEs) engaged in construction business in India. Further, the study attempts to find how MSMEs mitigate those risks.
Design/methodology/approach
Toward the objective of study, the authors used a case-based qualitative research design. Four firms were selected, and their owners and selected employees/partners were interviewed. Each firm is presented as an independent case to highlight the core risk management (RM) philosophy of each firm. This was followed by a thematic analysis to arrive at the major risks involved in MSME construction projects and their mitigation strategy.
Findings
MSME firms engaged in the construction business in India are not keen on following formal RM practices because they believe that it makes the bid unviable. MSMEs find it difficult to identify most of the problems in a construction project due to an uncontrolled environment and believe that it is best to resolve the issues as and when they occur. They have acquired tacit knowledge on hindrances and deal with them as and when they occur. Anything that can go wrong will go wrong is the basic philosophy.
Research limitations/implications
A small sample size makes the generalization of its findings difficult.
Practical implications
MSMEs cannot afford to hire specialists in project RM due to financial constraints. Hence, it would be worthwhile sending experienced employees for a short duration of training on the same.
Originality/value
To the best of the authors knowledge, it is a first-of-its-kind study focusing on RM practices of MSME, particularly in the construction sector.
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Immaculata Anthony Ekpo and Timothy Tunde Oladokun
Errors or negligence are inherent parts of professional services, thus necessitating the adoption of professional indemnity insurance (PII) as a risk management tool to protect…
Abstract
Purpose
Errors or negligence are inherent parts of professional services, thus necessitating the adoption of professional indemnity insurance (PII) as a risk management tool to protect professional interest. This paper sought to examine the adoption of PII among Estate Surveying and Valuation firms in Oyo State, Nigeria.
Design/methodology/approach
The quantitative research methodology was adopted, and primary data were collected via questionnaires distributed to 84 purposively selected Estate Surveyors and Valuers (ESVs) who are mostly principal partners or branch managers in the study area. Sixty-three questionnaires representing 75.0% were returned and found useable. Data collected were analysed with the aid of descriptive statistics of percentages and relative importance index (RII).
Findings
The study found that the influence of foreign investors as well as the requirements of PII by the professional body as a basis for annual license renewal were responsible for higher level of awareness among the practitioners. However, about average of the firms had adopted PII with few taking professional insurance policy of as low as ₦500,000 per annum. The study recommends that NIESV/ESVARBON should sensitize, monitor and enforce the adoption of PII by ESVs as a means to increase public confidence and credibility of valuers while rendering professional services to clients.
Research limitations/implications
The current study was limited in coverage to Ibadan thus necessitating a study with wider area of coverage of national status.
Practical implications
The study has major implications on real estate education and practice in Nigeria. There is an urgent need for the professional body to devise means of enforcing compliance with the adoption of PII so as to be able to get the confidence of their teeming clients for subsequent patronage.
Originality/value
The paper is one among the scanty studies that provides a useful guide to real estate practitioners in developing countries towards adopting PII to shield the company from unnecessary negative exposure and financial loss.
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Sateesh V. Shet, S.V. Patil and Meena R. Chandawarkar
The purpose of this paper is to explore the relationship between competency-based performance management and organizational effectiveness (OE). It signifies the importance of…
Abstract
Purpose
The purpose of this paper is to explore the relationship between competency-based performance management and organizational effectiveness (OE). It signifies the importance of developing competency-based performance concept in organizations. Since conventional performance management systems (PMSs) are diminishing and as organizations are looking for breakthrough PMSs, this research attempted to fill the gap from stakeholder’s perspective – employee, manager and organization in devising new approach in PMS.
Design/methodology/approach
The research design involved developing scale for “competency-based superior performance” and validating scale for “organizational effectiveness,” The data for this survey are collected from 292 respondents through structured questionnaire. Hypotheses depicting aforementioned relationships were empirically tested in the context of competency-based performance practices in organizations based in India. Structural equation modeling (SEM) technique was used for data analysis.
Findings
The empirical results provide methods to accelerate the performance management initiatives based on a leadership competency model (LCM), which are necessary for building performance culture in the organization. The paper contributes by developing a new scale for measuring competency-based performance practices. The scale for OE is revisited. A positive relationship between competency-based superior performance and OE with productivity, adaptability and flexibility has been empirically confirmed using SEM.
Research limitations/implications
The paper limits the performance measurement concept using leadership competencies.
Practical implications
The developed model will act as a building block for performance measurement in organizations. This paper promotes LCM to be applied in creating a performance-based culture.
Originality/value
This is a unique attempt to test the relationship between competency-based performance management and OE.
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Mehran Nejati and Sasan Ghasemi
This paper aims to investigate corporate social responsibility (CSR) practices in Iran from the perspective of employees.
Abstract
Purpose
This paper aims to investigate corporate social responsibility (CSR) practices in Iran from the perspective of employees.
Design/methodology/approach
To achieve the objectives of this research, the perceptions of 142 Iranian employees were examined regarding the CSR practices of their respective organizations. The required data were collected using a questionnaire. Exploratory factor analysis was conducted to refine scale items and confirm the factorial structure of the scale applied. Descriptive statistics and a t‐test were used to analyze the data.
Findings
The paper unveils information about the current status of CSR in Iran from the perspective of employees, and shows that on average Iranian employees perceive their organizations to be committed to CSR, although the mean CSR scores were relatively low in all dimensions. Also, this research shows that while the four‐factorial structure of Truker's CSR scale was confirmed in the Iranian context, some of the items had to be removed from the original scale when measuring CSR.
Research limitations/implications
The relatively low mean on the categories of CSR among Iranian organizations from the perspective of employees indicates the infancy level of CSR among Iranian organizations and calls for further awareness among Iranian organizations and managers about the issue of CSR. This research also shows that researchers need to be cautious when using CSR scales that have been developed in Western or European contexts to measure social responsibility activities of organizations in culturally different contexts such as the Middle East. A major limitation of this research pertains to sample size, which limits the generalizability of the findings to the whole country.
Practical implications
This research indicates the infancy level of CSR among Iranian organizations and calls for further engagement of Iranian organizations in social initiatives and community outreach endeavors.
Originality/value
Being among the first research studies of its kind to examine the CSR status in Iran, this study provides invaluable understanding and insights about the status of CSR in Iran, an important country in the Middle East. Furthermore, it validates and supports a recently proposed CSR scale by providing empirical findings from a culturally different context.