An Analysis of the Use of Insurance by Banks - Evidence from the Nigerian Banking Sector
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Date
2016
Authors
Fadun, O.S.
Hood, J.
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Abstract
The global financial crisis in the banking sector centred on range of issues connected with risk and its management. In effect, many banks were seen as being excessively focused on the potential rewards of high-hazard activities; but focused less on the negative consequences of those activities. The study also identified insurance policies suitable for managing banking risks, and articulated the need for banks to use appropriate insurance policies to manage their risks. Using data collected through questionnaire from 1050 participants selected through stratified sampling technique; the study analysed the use of insurance in the Nigerian banking sector. The study was based on the theoretical aspects of insurance practice. The findings suggest that: banks have insurance company or subsidiary firm, banks purchase insurance through insurance brokers/intermediaries; banks are statutorily required to purchase insurance, and centralisation of insurance and risk management practices are paramount risk management practices among banks in Nigeria. Generally, the study indicated that banks should clearly articulate risk management policies in order to promote organisation-wide effort and effective management of risks across organisational spectrum; thereby, integrating risk management into banks’ philosophy, practices and business plans. The implication for practice is that insurance is a risk management tool, suitable for managing banking risks.
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Fadun, O. S. and Hood, J. (2016). An Analysis of the Use of Insurance by Banks: Evidence from the Nigerian Banking Sector. Nigerian Journal of Management Studies, 27(1), 168-181.