Risk Pricing and Profit Maximization of Insurance Companies

Abstract

Insurance companies continue to face intense pressure to improve performance, increase profitability, deliver superior customer service and increase shareholder returns. This is primarily due to the fact that operating efficiency is of particular interest for managers whose aim is to improve the performance of their firm and, therefore safeguard the stability of the financial system by generating enough profit. The research investigates the impact of pricing of risk on the profitability of Nigeria insurance market and also the relationship between operation expenses and profitability of the non-life insurance market in Nigeria. Results show that economy, competition and government regulation have effect on pricing of risk. Also, it was observed that operation expenses is strongly correlated to profitability and should be properly managed for profit maximization.

Keywords: Pricing, risk, profitability, operating expenses