The stocks of most insurance companies in Nigeria are not enjoying investors’ assurance and patronage because of low return on investment among other related reasons.
This is not unconnected with low earnings usually stated by insurance companies.
One of the reasons for this low lucrativeness is the high operating costs that usually characterize the operations of insurance companies in Nigeria.
The article hence examines the kind of operating costs dominance and its grandness for business endurance.
It also highlights the strategies insurance companies could utilise in reducing of operating costs and guaranteeing logical profitability.
Data were collected from the Yearly Reports of 15 randomly several insurance companies in Nigeria for the session 1996-2005.
Multiple fixation coefficient and analysis of variability were used in establishing by how much total operational cost will increase/reduce if there is a percentage increase/decrease in expenses and claims and whether there is a substantial difference in operational costs as a result of management expenses, commissions and claims expenses respectively.
The paper concludes that insurance companies wishing to survive and maintain earnings in the face of today’s contrary and competitory operating environment must as a measured policy include operational costs control in their scheme portfolio.