Effects Of Corporate Image On Financial Performance Of Insurance Companies In Nigeria

Project and Seminar Material for Insurance

Effects Of Corporate Image On Financial Performance Of Insurance Companies In Nigeria


Insurance companies in Nigeria have failed to realize the role a good corporate image play in business dealings. This is probably because they do not understand the concept of corporate image and necessary tools for promoting same. Corproate image, in fact, goes beyond attractive corporate office, producing quality products or rendering quality service, advertising, paying good salary and so on. It pervades every aspect of a business concern-from the least worker’s personality to the dealings within the organization and with the large society. In the face of the dynamics of our society especially in the business world, brought about by technology, firms are faced with stiff competition that maintaining a competitive edge requires aggressive strategies. One of such strategies is effective corporate image management and promotion. The focus of this research work was to investigate the strategies that could be employed to build and promote corporate image effectively in order to enhance the financial performance of insurance company in Nigeria. The researcher made use of both primary and secondary method of data collection. Chapter four formed the data presentation and analysis of data collection through the questionnaire. The research hypothesis were also tested using the chi-square test. In chapter five, the findings of the study was summarized with relevant recommendations made and the outcome of the study was concluded.

Chapter One


1.1 Background of the Study

Insurance industry has been recognized globally as a driver of economic growth and development. The industry provides financial security to policy holders, through the pooling and investment of premiums out of which those who suffer unexpected losses are indemnified (Unachukwu, Afolabi, Alabi, 2015).

Today, the insurance industry is characterized by globalization, standardization, fast technological changes and large scale advantages. These changes have resulted in questions being raised among insurance providers such as “who are we’? and `what kind of business do we operate”? questions that are closely related to management of identity and image (Balmer, 2008, Hatch and Schultz, 1997).

Thus, the constant changes experienced within the insurance industry have led not only to intense competition among the insurance firms but also making these companies to portray its image intensively (Gronroos, 1990). Also insurance is a business built on trust and the major ingredient that gives flavour to the strategic roles played by insurance in the economy is confidence at such the corporate image remains a priceless asset that will not only strengthen the already existing public confidence but attract more customers to the industry. It is therefore, more important for insurance to understand their customers and the image perceived by customers of the organization (Balmer, 2008, Fombrun and Shanley cited in Onikoyi and Onikoyi, 2013).

Corporate image has become a prominent paradigm and has begun to be linked to strategic management decisions of organizations including insurance especially in the advanced economies. The concept is based on the recognition that clients buy brand products not because of their inherent qualities but also because of a bias, a disposition towards the providers. Bayton (cited in Osei and Katsner, 2014), points out that people tend to “humanize” companies, attribute personality characteristics to them, see them much as they do to humans in terms of being “mature,” “liberal,” “friendly,” and such other related attributes. Maintaining or expanding market share, keeping customers and business relations loyal, pre-empting competitive moves, and maintaining a profitable position will depend on differentiation and a unique positioning in the minds of corporate audiences (Van Heerden and Puth, 1995).

Sunter (1993) indicates that the only way consumers will be able to differentiate between institutions in future is through image and brands. The importance of having a well-defined identity is therefore of major relevance for service providers such as insurance institutions. Thus, Gronroos (1984) argues that image is of utmost importance to service firms and is to a great extent determined by customers’ assessment of the services they receive.

Corporate image, the collective opinion of an organization held by its stakeholders has been identified as a construct of growing importance (Kitchen and Laurence, 2003. MacMillan et al 2002). Among other factors, reputation has been identified as playing a significant role in improving firm value (Gregory, 1991), enhancing consumer perceptions of product quality (Grewal et al. 1998), raising employee morale, productivity and improving recruitment and retention (Turban and Cable, 2003), and permitting access to cheaper capital (Beatty and Ritter, 1986). Firms whose assets are difficult to imitate may achieve sustained superior financial performance (Grant, 1991).

Despite the understanding of corporate image on organizational financial performance, insurance firms in Nigeria often than not in building corporate strategy usually ignores the perception that internal and external audiences hold about the firm, but Balmer and Stotvig (1997), argue that firms must be fully aware of the image they are sending to both their external and internal audiences. This implies that the principles enshrined in their vision and mission must logically reflect their corporate image (Abratt and Mofokeng, 2001). Whether in fact that corporate image is positively or negatively related to organizational financial performance is an empirical issue that this study seeks to uncover by critically examining the effect of corporate image on financial performance of the insurance companies in Nigeria with a special reference to Mansard Insurance Plc.

1.2 Statement of the Problem

Customer, analysts, employees, institutions or general public decide when a company deserves their regard, respect and trust depending on its actions and behaviour towards the market and the society, and this behaviour is expected to shape the performance of the corporate entity be it an insurance company or any other form of business.

Various firms aim to achieve higher customer retention rates, associated increased sales and product selling prices and reduced operating costs which are all benefits of a good corporate image. This can be achieved through truthful advertising, innovations, corporate social responsibility, ethics, goodwill and having a history of fulfilling obligations to various stakeholder groups thereby increasing the competitive advantage of an insurance company.

Even with the understanding that there is an abysmal culture of insurance in Nigeria, many insurance companies in a bid to achieve and sustain competitive advantage in the Nigerian insurance industry seem to be too busy chasing profitability while their corporate image is left unattended. They seem not to realize that competitiveness is not just about number, but certainly the impression that people and businesses hold about them.

In the advanced insurance business clime the management of intangible assets like corporate image, identity and reputation are integrated into the managerial tactical tools to strengthen not just competitive advantage but to command impromptu demand. But in the developing countries, particularly in Nigeria the significance of corporate image seem not to be acknowledged by the insurance practitioners; a reason why many feel that the poor financial performance of the insurance industry may not be unconnected to corporate image.

Many of the studies on the relationship between corporate image and financial performance of companies were done outside Nigeria. These studies particularly focused on the banking industry. Research on corporate image and financial performance of insurance companies are very scanty. In Nigeria, most of the available studies about corporate communication such as Egwu (2007), Iwu-Egwuonwu (2011), Adiele and Opara (2014) largely focused on corporate reputation across various organizational settings. These researches were also theoretical studies whose findings were subjectively based on researchers’ personal opinions. It is noted that the past studies did not give adequate attention to the impact of corporate image on financial performance of insurance companies in Nigeria, as well as highlighting effective corporate communication strategy that can stimulate better organization performance. Hence, the undertaking of this research work will fill in the gap by critically exploring the effect of corporate image on financial performance of insurance companies in Nigeria with a special reference to Mansard Insurance Plc.

1.3 Objectives of the Study

The main objective of the study is to find out the effect of corporate image on financial performance of insurance companies in Nigeria. Specific objectives are;

  1. To examine if there is a significant relationship between branding and financial performance of insurance companies in Nigeria.
  2. To find out the influence of public opinion on consumers’ responses to insurance.
  3. To explore the role of advertisement in image management in insurance.
  4. To identify the factors which contribute to the declining image of insurance and to proffer solutions and recommendations to these problems.

1.4 Research Questions

The undertaking of this research project will beam a searchlight on the following research questions;

  1. Is there a significant relationship between corporate image and financial performance of insurance companies in Nigeria?
  2. What is the influence of corporate public opinion on consumer demand for insurance?
  3. To what extent does effective advertisement impact on image management in insurance?

1.5 Research Hypotheses

The researcher intends to test the following hypotheses;

Hypothesis One:
  • Ho; There is no significant relationship between branding and financial performance of insurance companiesin Nigeria.
  • Hi; There is a significant relationship between branding and financial performance of insurance companiesin Nigeria.
Hypothesis Two:
  • Ho; Public opinion is not related to consumer demand for insurance
  • Hi; Public opinion is related to consumer demand for insurance
Hypothesis Three:
  • Ho; There is no significant relationship between advertisement and image management in insurance
  • Hi; There is a significant relationship between advertisement and image management in insurance

1.5 Significance of the Study

Image has to do with the impression in the public consciousness. it is the desire of every organization to have a good image. For corporate entity especially, the image of insurance companies and bankers appear to be at its lowest ebb at present.

It is imperative that a way to turn around the declining image of banks be found very urgently. It is from this standpoint that this study becomes very important in the crusade to restore the lost glory of insurance in Nigeria.

The study is also of immense importance to bring to the awareness of the public and management of firms the role image management play in financial performance using Mansard Insurance Plc.

It will also help to understand the strategies the Mansard Insurance Plc adopt in building, managing and promoting a favourable corporate image.

The management of these banks will benefit from this study as it will review and explain the circumstances and factors which contribute to the image management problems. The recommendation of the end of the study will enable the management to take adequate measures that will forestall the reoccurrence of these problems.

Finally, the study will be of great significance to both the sector, customers of the firm, the general public and the students for academic purposes who wish to carry out studies on the subject matter in the future.

1.7 Scope of the Study

In carrying out the research, attention was focused on insurance companies with particular reference to Mansard Insurance Plc, Enugu State.

Even though the study will be made from limited institutions, it is expected that findings will not differ from opinions of staff of other banks since they have related experience, education and training.

Chapter Five

Conclusion and Recommendation

5.1 Conclusion

We live in a world of change. As a matter of fact, the rate of change today is faster, and affects a larger portion of the earth’s population, than at any other time in history.

Yet, despite all these changes, there is still one constant. And this is that marketing excellence and a strong corporate image are firmly linked. A company cannot have one without the other. At least not for very long, because at the end of the day, a better competitor would emerge and outsmart the other. “The long run rationale for a favourable corporate image is that such an image produce a climate conducive for growth and improved earnings”.

Marquis (1970: 20) laid down policy building rest in the onus of top management to ensure that corporate image forms part of long range planning. Also customers satisfaction is of vital importance because customers are the most valued assets of an organization.

As already stressed throughout this research, sound relationship with the mansard insurance plc special public such as customers, employees, investors, shareholders, governments etc is indispensible. It is observed that social responsibility is not really a form of giving but represent investment policy. Effective and efficient managers keep their banks in profitable interaction with the business environment.

It has been noted that good community relations and good communication increase the chances of an organization at the market place. One of the results of such is that new customers are attracted and present ones retained.

Finally, there is a gain saying the fact that a good corporate image is necessary for the survival and growth of the company. Therefore, it should receive the same attention as the other major functions of management.

If the management would improve its corporate image in the light of this research, it would enhance its reputation and ultimately its performance at the market place.

5.2 Recommendation

Following the findings of this project report, the researcher therefore recommends the following:

  1. There is need to improve upon employees welfare and management worker relations.
  2. The public relations efforts should be improved upon.
  3. Mansard Insurance Plc should expand the scope of its corporate social responsibility.
  4. There is need for Mansard Insurance Plc to imbibe the culture of giving attractive packages to its customers.
  5. Communication and information within the firm and between its numerous public should be properly managed.

In most cases, corporate image making starts from the type of information that emanates from the organization. If the information is credible with substance, then the company has had its work cut out for it, but if the information is bad, it could damage the image of the organization.

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