Risk Management and Performance Assessment in Nigeria's Non-Bank Financial Institutions

This study examined the effect of risk management techniques on the performance of insurance companies in Nigeria, as empirical studies in this area are seemingly insufficient for objective assessment and justification for continuous involvement in this core aspect of insurance strategy. The Structural Equation Model (SEM) of the primary data obtained from 41 randomly sampled insurance companies in Nigeria (Lagos State in focus) enabled the researchers to establish that the adoption of loss prevention and control; risk avoidance; and loss/risk financing as risk management techniques significantly enhanced positively the performance (proxy by underwriting profitability) of insurance companies in Nigeria. It should be noted, however, that the loss prevention and control technique of risk management commanded a higher positive correlation when measured against underwriting profitability than the other two techniques of loss/risk financing and risk avoidance. The study concluded that risk management techniques have positively and significantly influenced the underwriting profitability of insurance companies in Nigeria. It is recommended, therefore, that insurance companies in Nigeria should implement more preventive and control measures that will help to reduce the frequency of certain specific losses that could arise in the course of business.