ASSESSMENT OF FACTORS INFLUENCING INSURANCE VALUATION RELIABILITY IN KWARA STATE TERTIARY INSTITUTIONS

Abstract

Property valuation is an essential tool in decision making on real estate for both pecuniary and Non pecuniary (policy formulation,administration prestige e.t.c). Insurance Valuation as one of the purposed of valuation is characterized with peculiarities as it is associated with misfortune management. In order to justify the value on the side of both the insurer and the insured, this study assessed the insurance valuation accuracy and reliability in Kwara State Tertiary Institutions. This study adopted a case study approach in which the Tertiary Institutions, the Insurance Firms and the Estate Surveyors and Valuers were involved as respondents. Respondents were purposively selected, and, a total of Thirteen (13) Tertiary Institutions; Five (5) Insurance Firms and Twenty-Three (23) Estate Surveyor and Valuers were considered. The study employed both descriptive and inferential statistics which includes; Simple Percentages, weighted mean score, Linear Regression Analysis, T-test and FactorAnalysis. The study revealed that out of the nine (9) methods of valuation considered in the survey, depreciated replacement method ranked first with weighted mean of 3.00, followed by Replacement cost with weighted mean of 2.43. Fair market value ranked third while the Discounted cash flow ranked fourth. The Monte Carlo Simulation ranked last followed by Variance Covariance method. The reliability of insurance valuation in the study area was done using simple percentages. The result revealed that 61.1% of the respondents asserted that the insurance valuation done in the study area is not reliable, 22.2% of the respondents are of the opinion that the insurance valuation in the study area is reliable while 11.1% strongly believe that the insurance valuation in the study area is reliable and 5.5% of the respondents are indifferent about the reliability. The result of the regression analysis yields an accuracy model for the insurance valuation. The result revealed a model between the Insurance value claimed and Insurance Value Paid (Insurance value Paid= 96208.633 + 0.592Insurance Value Claimed). The equation showed that the coefficient for insurance value Claimed0.592 which indicates thatfor every N1 additionin theinsurance valuePaid, thereis 0.592 decrease in the insurance value claim (59.2%). The result from the analysis on the factors influencing insurance valuation accuracy in Kwara State Tertiary Institution were categorically Seven as grouped through factor analysis. These factors include Valuer, Approach, Information, Standardization, Typology, Yield and Market Factors respectively. The study recommended that Estate Surveyors and Valuers should look beyond old methodology in carrying out Valuation so as to be able to have a more modern approach to valuation generally. Estate Surveyors should be meticulous in execution of valuation exercise in order to avoid unrealistic assumptions which can bring a question on their skills and professionalcompetence.