Introduction
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 andfinancial 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 onfinancial 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;
- To examine if there is a significant relationship between branding and financial performance of insurance companies in Nigeria.
- To find out the influence of public opinion on consumers’ responses to insurance.
- To explore the role of advertisement in image management in insurance.
- 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;
- Is there a significant relationship between corporate image and financial performance of insurance companies in Nigeria?
- What is the influence of corporate public opinion on consumer demand for insurance?
- 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
