ABSTRACT

Motor insurance fraud poses a significant challenge to the Nigerian insurance industry, affecting both premiums and profitability. The study investigates the consequences of motor insurance fraud on insurance companies in Nigeria, focusing on loss ratio, profit margin, premium change, and incidence rate. Using a quantitative research design, data from nine insurance companies operating in Nigeria over a thirteen-year period (2010-2022) were analyzed through panel least squares regression.

The findings reveal that loss ratio, premium change, and incidence rate have no significant relationship with profitability. However, profit margin positively and significantly affects profitability. These results suggest that while motor insurance fraud variables do not significantly impact profitability, efficient management of profit margin is crucial for insurance companies to maximize profitability.

The study recommends, among others efficient management of motor insurance fraud risks and prudent management of revenue and expenses to optimize profit margin