Abstract

This study investigates the effect of claims management practices on the financial performance of insurance companies in Nigeria. Using secondary data from nineteen listed insurers over the period 2012–2024, the study examined how claims payment efficiency, loss adjustment, and processing practices influence profitability, operational efficiency, and other performance indicators. Principal Component Analysis (PCA) was employed to construct composite indices for claims management, reinsurance, financial performance, and efficiency. Panel data regression models, including Pooled OLS, Fixed Effects, and Random Effects, were used to test the hypotheses, with the Hausman test guiding model selection. Findings indicate that efficient claims management and larger firm size positively influence financial performance, while higher leverage negatively affects profitability. Reinsurance showed a positive but statistically insignificant effect. The study concludes that insurance companies that invest in effective claims management, adopt technologydriven processes, and maintain prudent financial leverage are more likely to achieve superior performance. Recommendations include strengthening claims units, optimizing reinsurance strategies, expanding firm size strategically, and enhancing internal operational efficiency