IMPACT OF CLAIM PAYMENT ON PROFITABILITY OF NEPALESE NON-LIFE INSURANCE COMPANIES
Date
2024
Authors
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Publisher
Shanker Dev Campus
Abstract
This study investigates the determinants of profitability in Nepalese non-life insurance companies, focusing on key financial indicators and their impact on return on assets (ROA) and return on equity (ROE). The research aims to provide empirical insights into the factors influencing financial performance within this sector. Using a descriptive and causal research design, secondary data from eight selected non-life insurance companies in Nepal spanning from fiscal years 2013/14 to 2022/23 is analyzed. The study examines variables such as claim paid, expenses ratio, loss ratio, solvency margin, net profit, and company size to assess their relationships with profitability metrics.
Descriptive analysis reveals the financial status of these companies, while correlation analysis identifies significant associations between variables. Multiple regression analysis further explores the impact of these factors on ROA and ROE. The findings highlight several critical determinants of profitability. Efficient management of claims, effective control of expenses, and reduction of loss ratios emerge as pivotal factors contributing to enhanced profitability. Maintaining a robust solvency margin and achieving sustainable net profits are also crucial for long-term financial stability. The study underscores the positive influence of company size on profitability, indicating economies of scale and market positioning advantages. In conclusion, strategic financial management practices play a crucial role in driving profitability in Nepalese non-life insurance companies. The study's results provide theoretical insights into insurance economics and offer practical implications for industry stakeholders. Recommendations include adopting efficient operational strategies, leveraging technological advancements, and maintaining financial health to navigate and thrive in a competitive market environment. These findings contribute to advancing knowledge in insurance economics and offer actionable insights for enhancing financial performance within the sector.