Actuarial Science and Insurance -Scholarly Publications

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    Open Access
    Beyond Philanthropy: Corporate Social Responsibility in the Nigerian Insurance Industry
    (Emerald Group Publishing Limited, 2008) Obalola, M.A
    Purpose – The purpose of this paper is to show that given the dearth of literature on how firms in the African continent have embraced and practiced corporate social responsibility (CSR), this study contributes to the CSR literature by examining managers' perceptions about CSR, structural changes to enhance, its implementation, and the pattern of current CSR actions in Nigeria. Design/methodology/approach – The study used quantitative approach and collected primary data through a three‐part structured questionnaire, from insurance firms operating in Nigeria. The 67 responses received were analysed descriptively and the results presented. Findings – The overall results indicate a strong support for social responsibility and the translation of this support into action through involvement in some community based projects. Evidence from the study also suggests that social responsibility is still largely perceived as a philanthropic gesture. Research limitations/implications – The study only covers insurance firms operating in Lagos state. Furthermore, only one response represents the view of a firm, hence the need to exercise caution in generalizing the results. Practical implications – Since the results suggest the readiness of the Nigerian insurance firms to go beyond the traditional view of profit and shareholders' wealth maximization, there must be a consistency between this posture and their actions. Originality/value – The study provides an insight into perceptions about corporate social responsibility in the insurance industry, in a developing country and in Africa, which to the best knowledge of the author, have not been done before.
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    Open Access
    Perceived Role of Ethics and Social Responsibility in the Insurance: views from Developing Countries
    (Knowledge Globalisation Institute and Sawyer Business School, 2008) Obalola, M.A
    The convoluted nature of insurance, like any other financial services, makes insurance business vulnerable to ethical dilemma, thus requiring managers to show high level of socially responsible behavior in dealing with prospects and existing customers. However, before managers' behavior can become ethical and reflect greater social responsibility, they must first perceive ethics and social responsibility to be important for organizational effectiveness. This study therefore examines the perceptions of insurance managers in Nigeria, using the PRESOR scale, about the role of ethics and social responsibility in business success. The moderation effects of personal and situational factors were also examined. The dimensionality of the scale was determined for the study' samples through principal component analysis (PCA) and its reliability were assessed. Results of the analysis were presented and discussed, with managerial implications.
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    Open Access
    A statistical model for combining JAMB and post JAMB Scores: with an illustration based on University of Lagos 2006/2007 admissions data
    (2009) Okafor, R; Adeleke, I. A; Opara, A
    The aim of this research is to find a statistical model for combining JAMB and Post-JAMB scores. The problem arises from the ad hoc manner in which most universities combine the two scores for admission purposes. Our model achieves a combined score using a most statistically efficient technique. We recommend it to the universities.
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    Open Access
    An Empirical Examination of Moral Beliefs of the Nigerian Insurance Managers and the Moderating Effects of Corporate Ethical Values and some Demographic Factors
    (2010) Obalola, M.A
    Insurance like most financial services is a complex system of interfaces and exchanges, requiring prospects to rely heavily on the technical information supplied by sales persons to make crucial decisions of long term consequences. Even at this, insurance companies are sometimes compelled by court's interpretation of certain clauses, terms and condition and rulings to fulfil promises made at the inception of policies. The vulnerability of insurance sales persons and practitioners to ethical abuse has grievous implications for insurance industry worldwide and there's a need to examine the ethical values of its managers. This study explores the effects of perceived corporate ethical climate on the moral beliefs of managers in the industry, as well as managerial differences in these two measures on certain demographic variables. The results obtained are presented and discussed with managerial implications.
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    Open Access
    Assessment Of The Level Of Participation Of Workers Towards Developing Old Age Survival Policies Using The Informal Sector
    (The Faculty of Business Administration, University of Lagos,Akoka, Lagos., 2010-12) Mojekwu, J.N; Udoh, H.M.
    Informal sector in Nigeria is a provider. of employment. It. is very precarious in nature. The sector is disorganized, unprotected and unregulated. The employment strategy is not formalized therefore; it is not given a greater attention in valuation of national income account. The sector fights against unemployment, dismissal and underemployment. The provisions for survival through their activities are usually tentative. This study realized that their expected income often comes through daily contributions Ajo/Esusu ", "Adashi" and ..Utu-ubochi ") in Yoruba. Hausa and Igbo languages) and is distributed for various uses. In the study, various activities from artisans and craftsmen in rural and urban settlements, in Lagos(Nigeria) were selected Survival strategies were verified and chi-square tests carried out to find out the dependency of activities and income from selected variables. This was used to establish the emphasis on their plans ;or old age survival. It was realized that informal sector is a flourishing sector due to participants' passion and quest for economic survival. Generally, employment provision cuts across various ages. The main purpose of this study is to assess the extent of involvement of the workers in the informal economy,towards development of old age survival policies.
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    Open Access
    Attitude and Perception about Insurance Fraud in Lagos State, Nigeria
    (2011) Ojikutu, R.K; Yusuf, T.O; Obalola, M.A
    his study examined the attitude and perception of residents of Lagos State, Nigeria towards insurance fraud. Literature search shows that research in the area is almost nonexistent in Nigeria in general and Lagos State in particular. A sample of 400 respondents were selected for the study and only 85.25 percent of them returned the questionnaires. The result of the study showed that there is general public tolerance or indifference towards fraud. About 60 percent of the respondents do not trust their insurance companies and as many as 17.1 percent of those who have suffered a loss or damage in the past would not file claims because they do not think their insurance company would be transparent in the dealings.
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    Open Access
    A Bootstrap Model for estimating the concentration of some heavy metal pollutants of ground water from soil
    (2011-11) Adeleke, I.A; Okafor, R; Esan, E.O; Olayinka, O.K; Oyeyiola, A.O; Odunuga, S; Dallah, H
    Estimation of the concentration of some heavy metals in soil is very important in risk assessment study to determine contaminant risk to water from soil. An adaptive cluster sampling technique was employed and a model-assisted approach that incorporates models into design-based estimation was used. In this paper, a bootstrap procedure is proposed to approximate the distribution of the concentration of heavy metals in the soil. The proposed method overcomes the problems associated with methods requiring distributional assumptions the validity of which are often times extremely difficult to check. We conclude with a comparison of this procedure to the well known Horvitz-Thompson (HT) type estimator.
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    Open Access
    Comparative analysis of modes of monetary exchange rates in Nigeria.
    (2011-12-28) Mojekwu, J.N; Okpala, O.P.; Adeleke, I.A.
    The study examined and compared the three modes of monetary exchange rates available in the Nigerian financial sector. The study utilized the data on the three alternative modes of monetary exchange rates, namely, Central Bank of Nigeria, Bureau de Change rates and Inter-bank rate against US Dollar. Time series was fitted to the three sets of data and the result examined for effective comparison. The results reveal that Central Bank of Nigeria yields the most stable exchange rate while Bureau de Change rates and the Inter-bank exchange rates fluctuate over the periods. Autoregressive integrated moving average (ARIMA) model was used to fit time series to the three sets of data. Findings reveal that there are variations in the performances of the three modes of exchange rates against US Dollar. The study concluded that Central Bank of Nigeria exchange rate is most stable while Bureau de Change and Inter-bank exchange rates to US Dollar fluctuate over the period under investigation.
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    Open Access
    Measuring the Perceived Importance of Ethics in Social Responsibility in Insurance Business: a Narrative-Inductive Approach
    (Emerald Group Publishing Limited, 2012) Obalola, M.A; Adelopo, I.A
    Purpose – This paper aims to reflect the argument that the impetus to engage in socially responsible actions is ultimately reinforced by the perceived belief that doing so will be beneficial to the corporation in the long run. Design/methodology/approach – The paper uses a narrative‐inductive approach to make important contributions to the corporate social responsibility‐organizational effectiveness literature. Data were collected through a semi‐structured interview, and analyzed using qualitative analysis strategies. Findings – The study reports a profound perceived usefulness of ethics and social responsibility for business in the insurance industry in Nigeria. Furthermore, the study presents evidence that indicates that consciousness about the role of ethics and social responsibility in organizational effectiveness in this context is low, but, nevertheless suggests a positive posture towards the constructs. This positive posture seems to have been driven by the negative image of the industry and the need to remedy the situation. It suggests that this can be achieved through a show of genuine concern for the needs of the consumers, and the need to reinforce their trust and confidence in insurance as a loss mitigating mechanism. Practical implications – While shareholders' value maximization was shown as one of the considerations for ethical and social responsible behavior compromise, findings from the study also suggest that stakeholders' value maximization would be an effective consideration for the industry to improve the present low market penetration. The paper draws out the need to amend short‐term goals for long‐term goals by sacrificing short‐term profits for long‐term profits and survival. Originality/value – Although the strategic importance of ethics and social responsibility has been investigated using the deductive approach in other industries, this work provides an alternative to this existing bulk of positivist investigations by using an inductive approach with subjects drawn from the insurance industry. The study also seems to the authors' knowledge, the first to investigate the strategic importance of this construct in a developing and apathetic market such as Nigeria.
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    Open Access
    Determinants of Web-accessibility of Corporate Social Responsibility Communications
    (Emerald Group Publishing Limited, 2012) Adelopo, I; Moure, R.C; Preciado, L.V; Obalola, M.A
    The corporate social responsibility (CSR) debate has developed tremendously over decades. However, while CSR communication has developed significantly, web‐accessibility of CSR communications is under researched. The purpose of this paper is to examine how firms make their CSR communications accessible to their stakeholders on the internet. Design/methodology/approach – The authors used number of “clicks” to download CSR communication of a firm to measure its accessibility. Independent mean test showed that CSR communications by high impact sectors are more accessible on the internet than low impact sectors, but web‐accessibility is not affected by country. Findings – Although CSR research has grown tremendously over the decades, the discourse has been largely restricted to disclosures in the annual reports and, lately, to the standalone sustainability reports. In addition, they have mainly examined the management's motives for disclosures, using legitimacy theory as the most influential theoretical underpinning. Only very few studies have examined CSR communication on the internet and even these studies have only researched the content of the disclosure, examining the quality and quality of disclosures. Originality/value – The originality of this paper lies in its consideration of the effect of firms' CSR communications on the recipients. While CSR communication has developed significantly, web‐accessibility of CSR communications remains under researched.
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    Open Access
    Artificial Neural Network Model for Predicting Insurance Insolvency
    (2012) Ibiwoye, A; Ajibola, O.O; Sogunro, A.B
    serves as a medium for fund mobilization. In spite of the harsh economic environment in Nigeria, the insurance industry has been crucial to the consummation of business plans and wealth creation. However, the continued downturn experienced by many countries, in the last decade, seems to have impacted negatively on the financial health of the industry, thereby rendering many insurance companies inherently distressed. Although there is a regulator to monitor the insurance companies in order to prevent insolvency and protect the right of consumers this oversight function has been made difficult because the regulators appeared to lack the necessary tools that would adequately equip them to perform their oversight functions. One such critical tool is a decision making model that provides early warning signal of distressed firms. This paper constructs an insolvency prediction model based on artificial neural network approach which could be used to evaluate the financial capability of insurance companies.
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    Open Access
    The Intervention of Organizational Characteristics in the Relationship between CRM and Organizational Performance in the Nigerian Insurance Industry
    (2013) Olowokudejo, F.F; Obalola, M.A; Aduloju, S.A
    The main objective of this study is to find out if organizational characteristics intervene in the relationship between CRM and organizational performance in the Nigerian insurance industry. Relevant literature was reviewed and a model consisting of fourteen variables was conceptualized and tested by means of empirical data collected through a questionnaire. A total of one hundred and eighty (180) copies of questionnaires were administered, one hundred and forty nine (149) copies were duly completed and returned. This represents a response rate of 82.78%. Partial correlation was used to test the hypothesis. Findings show that organizational characteristics (companies’ image and branch network) intervene in the relationship between CRM and organizational performance in the Nigerian insurance industry. The study also shows that the strength of the intervention of companies’ image is stronger than that of branch network. The study recommended that insurance companies should pay attention to their companies’ image and branch network as these constitutes the ‘tangibles’ which customers can use to judge the likely performance of the organization.
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    Open Access
    Assessing the Relationship between Sales Quotas and Moral Judgement of Insurance Salespersons: The Moderating Effects of Personal Moral Values, Quota Failure Consequences, and Corporate Ethical Climate.
    (2013) Ojikutu, R.K.; Obalola, M.A; Omoteso, K
    There is an increasing call for managers in the Nigerian insurance industry to espouse higher level of ethical behaviour to earn the trust of customers, regulatory agencies, and other stakeholders. Arguably, this will enhance market penetration, increase patronage and higher level of profit. Theoretically however, ethical behaviour can be institutionalized in organizations if the top management support ethical behaviour through punishment and reward (high ethical climate). Other than corporate ethical values, managers’ beliefs about the rightness and wrongness of an action in a particular situation could also be a function of his/her personal moral philosophy. With respect to financial services, one aspect of marketing which have been empirically shown to have influence ethical judgement and behaviours of managers is sales quotas. When salespersons are assigned higher sales quotas, which are perceived as difficult, the tendency to engage in unethical behaviour to achieve this target becomes higher. In this study, we assess and extend the theoretical relationship between moral judgement of salespersons and perceived quota difficulty in the insurance industry. The study also explores the moderating effects of salesperson’s ethical values (idealism and relativism), corporate ethical climate, and quota failure consequences on the proposed relationship. With a structured questionnaire, data was collected from respondents in the target industry through a multi-stage sampling strategy. Exploratory factor analysis was performed to assess the factorial structure of the measures used in the study, their reliability and validity. Using correlation and regression analysis, the results were presented and discussed with managerial implications for the Nigerian insurance industry.
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    Open Access
    Assessing the Relationship between Sales Quotas and Moral Judgement of Insurance Salespersons: The Moderating Effects of Personal Moral Values, Quota Failure Consequences, and Corporate Ethical Climate
    (Scholarlink Research Institute Journals, 2013) Ojikutu, R. K.; Obalola, M. A.; Omoteso, K.
    There is an increasing call for managers in the Nigerian insurance industry to espouse higher level of ethical behaviour to earn the trust of customers, regulatory agencies, and other stakeholders. Arguably, this will enhance market penetration, increase patronage and higher level of profit. Theoretically however, ethical behaviour can be institutionalized in organizations if the top management support ethical behaviour through punishment and reward (high ethical climate). Other than corporate ethical values, managers’ beliefs about the rightness and wrongness of an action in a particular situation could also be a function of his/her personal moral philosophy. With respect to financial services, one aspect of marketing which have been empirically shown to have influence ethical judgement and behaviours of managers is sales quotas. When salespersons are assigned higher sales quotas, which are perceived as difficult, the tendency to engage in unethical behaviour to achieve this target becomes higher. In this study, we assess and extend the theoretical relationship between moral judgement of salespersons and perceived quota difficulty in the insurance industry. The study also explores the moderating effects of salesperson’s ethical values (idealism and relativism), corporate ethical climate, and quota failure consequences on the proposed relationship. With a structured questionnaire, data was collected from respondents in the target industry through a multi-stage sampling strategy. Exploratory factor analysis was performed to assess the factorial structure of the measures used in the study, their reliability and validity. Using correlation and regression analysis, the results were presented and discussed with managerial implications for the Nigerian insurance industry.
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    Open Access
    Corporate governance and insurance company growth: Challenges and opportunities
    (2013) Fadun, O. S.
    The paper examines challenges and opportunities associated with corporate governance and insurance company growth. It advocates the imperative of good corporate governance in the insurance industry. The paper describes corporate governance, examines corporate governance theoretical perspectives, highlights the challenges of corporate governance in Nigeria, and explores the relationship which exists between corporate governance and insurance company growth in Nigeria. The study is an empirical design using the responses of survey, structured questionnaires, of 112 respondents. Pearson product coefficient of correlation(r) is employed for data analysis and hypotheses testing. The findings reveal that good corporate governance promotes safe and sound insurance practice; effective supervision promotes good corporate governance; and the new code of good corporate governance for the Nigerian insurance industry enhances insurance companies’ growth in Nigeria. The implication for practice suggests that effective corporate governance is necessary for proper functioning of insurance companies in order to promote growth and secure public confidence. The paper highlights the fact good corporate governance practices can enable the Nigeria insurance industry to generate more resources to create more employment opportunities and support the economy by way of prompt claims settlement.
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    Open Access
    Corporate governance and insurance firms’ performance: Empirical study of Nigerian experience
    (2013) Fadun, O. S.
    The study investigates the relationship between corporate governance and performance of insurance firms in Nigeria. The data used for the study is derived from five consecutive years (2006 and 2010) audited financial reports of 10 insurance firms listed on the Nigerian stock exchange. This represents 50 firms-years time series observations. Using Pooled Least Square method, the data is processed with E-views software to derive statistical results. The results show varying positive relationship between corporate governance and firm’s performance. The board size, CEO status, audit committee, dividend policy and annual general meeting, all indicate positive relationship between corporate governance and performance of insurance firms in Nigeria. However, the results show negative relationship between block-holders and institutional ownership in relation to firms’ performance. The outcome emphasises the importance of good corporate governance structure in Nigerian insurance firms and the economy at large. The study contributes to knowledge on the subject in two major ways: first, it delivers a more robust and simple understanding of the impact of corporate governance on firm’s performance; and second, It fills knowledge gap because no study has been conducted on corporate governance and firm’s performance in the Nigerian insurance industry.
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    Open Access
    Promoting ‘Enterprise Risk Management’ adoption in business enterprises - Implications and challenges
    (2013) Fadun, O. S.
    The study advocates the adoption of Enterprise Risk Management (ERM) by firms. Despite the benefits of ERM, few firms have adopted it in Nigeria. The paper identifies factors which influence firms to adopt ERM, and explores ERM implementation challenges and benefits of adopting ERM. It also recommended a suitable ERM framework for use in Nigeria. Using the literature, the study establishes that the understanding of ERM, its benefits, factors stimulating firms to adopt ERM, and ERM implementation challenges are necessary to promote the adoption of ERM by firms in Nigeria. The study reveals that business enterprises in Nigeria have not understood and embraced ERM; hence, ERM is not widely adopted in Nigeria. The implication of the findings for practice suggest that: the understanding of ERM is necessary to facilitate its adoption in Nigeria; ERM must start in the boardroom in order to positively influence the way firms’ thought about risk, and planned for eventualities; and firms should integrate risk management into their organisation’s philosophy, practices, and business plans, rather than being viewed or practised as a separate programme. The government also needs to create a viable environment for businesses to thrive in order to appropriate the benefits of ERM to firms and the nation at large.
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    Open Access
    Implications and challenges of Basel II implementation in the Nigerian banking system
    (2013) Fadun, O. S.
    Globalisation necessitates drastic changes in the banking sector across countries. The regulation of banking in the developed industrial countries has increasingly focused on attaining financial stability. The Basel Committee on Banking Supervision provides a platform for regular cooperation on banking supervisory matters. Its objective is to enhance understanding of key supervisory issues and improve the quality of banking supervision worldwide. Basel I focus more on credit risks, not on operational risks, by establishing a direct link between capital of a bank and its credit risk. The risk identified by Basel I does not express the multiple risks banks can be faced. Basel II addresses the gap by establishing rigorous risk and capital management requirements designed to ensure that a bank maintains capital reserves appropriate to its risk exposures. The Nigerian financial sector has performed well in Basel I implementation. Nigeria is set to implement the Basel II to ensure that better risk management is adopted in the nation’s banking system. The study examines Basel II Accord implementation in Nigeria, explores its implications for the Nigeria banking system and issues with the Accord, and highlights recommendations for implementation of the Accord in Nigeria.
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    Open Access
    Risk management in the financial services sector - The derivatives option.
    (2013) Fadun, O. S.
    The paper examines risk associated with financial services sector (FSS) and suitability of derivatives to manage these risks in Nigeria. Derivatives enable firms to hedge against systemic and nonsystemic risks. The main types of derivatives are: forwards, futures, options and swaps. The paper highlights the need for development of derivatives market in Nigeria. To this effect, the Central Bank of Nigeria (CBN) has issued guidelines for foreign exchange derivatives to strengthen investors’ confidence. Using CBN publications and the literature, the study concludes that derivatives products are suitable for managing risks associated with the FSS in Nigeria; if properly engaged, derivatives provide massive economic benefits to the nation’s; and, development of derivatives market in Nigeria is necessary to enhance liquidity and mobilise the required capital for economy growth. The study is imperative in two major ways: first, it facilitates the understanding of derivatives market, products and participants; and second, it advocates the development of derivatives market and the use of derivatives to manage FSS risks. The study contributes to knowledge, as no study has been conducted on suitability and use of derivatives to manage the FSS risks in Nigeria.
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    Open Access
    Enterprise risk management practice in insurance companies - An empirical study of the Nigeria’s insurance industry.
    (2013) Fadun, O. S.
    The paper examines enterprise risk management (ERM) practice in insurance companies in Nigeria. Specifically, the study explores the understanding, motivation and performance of ERM in the Nigeria’s insurance industry, and the challenges which insurance companies faced in implementing ERM. The study concludes that the level of understanding of the nature of ERM varies significantly between companies and between different parts of the same organisation. The implication for practice is that effective ERM requires an interdisciplinary approach; but, the ERM which is practiced by insurers in Nigeria is dominated by a single discipline. The design of ERM is highly company specific and depends on several factors, e.g., the business model in terms of type of business, geographical presence, etc. ERM design also depends on the risk appetite of an organisation, which includes both qualitative and quantitative elements.