The impact of insurance premiums and investment on indemnity

Abstract

The study examined the impact of insurance premium and investment on the insurance firm’s ability to indemnify its clients. The study objectivities were to; examine the effect of total Premium collected on indemnity of NIC Customers, find out the effect of nature and type of investment of premium on indemnity in NIC, establish the effect of the types of insurance policies offered by NIC, on indemnity in NIC and determine the effect of age of the insured on indemnity of NIC clients. A case study design was used and data was collected from a sample of 50 respondents, self-administered questionnaires; interview guide and documentary review guide were used in the study. Findings from the study indicated that total Premium collected was used to lower the overall costs, to underwrite losses so as to remain competitive and survive in the insurance market and to buy shares in listed companies with a view of getting dividends. It was also exposed that premiums collected led to financial viability of NIC and provided coverage for losses that could arise many years in future. From the study it was concluded that Investment of premiums had led to financial viability of NIC, had maintained the solvency of a life fund and provided coverage for future losses that might arise. It was discovered that premium investment led to the ability of NIC to settle its claims with considerable ease, honour its indemnity obligations, foot its overhead costs and make a profit. It was exposed that National Insurance Corporation offered various insurance policies which included health insurance policy, life insurance policy, disability insurance policy, homeowner’s insurance policy, renter’s insurance policy and auto - insurance policy. To add to the above, the study revealed that age of the insured had a great impact on indemnity of NIC clients whereby age of the insured enabled the determination of insurance demand, it played an important role in determining adequate life insurance coverage and eligibility of the insurance considered age as an important factor. Finally, it was recommended that the organizational management should introduce other insurance policies that are needed by clients in order to increase on premium collected, the premium collected should not be kept idle on the insurance premium account to await claims being lodged and they should be pro-active and forward-looking and should invest this money through creating a float