Implications Of Industry Loss Warranty As Alternative Risks Transfer Solution On Performance Of Manufacturing Companies In Nigeria

The manufacturing companies are faced with many risks which includes regular business risks such as credit risks, switch in market taste, human and personnel risks, injury, damage to third party and so on. The industry handles these risks by way of risk transferring financial liabilities to willing parties through insurance.  However, there are risks that are existential to the industry that can be described as catastrophic such as natural disasters, terror attacks, pandemics, etc. These type of risks cannot be adequately covered by regular insurance. The aim of study is to determine impact of Industry Loss Warranty (ILW) as an alternative risks transfer solutions on the performance of Nigeria manufacturing companies. Based on the responses to the survey, Industry Loss Warranties (ILW) on one hand and performance of manufacturing in Nigeria on the other, revealed significant correlation between ILW as an ART solution and performance with correlation coefficient (r) of 0.648 with a p-value of 0.000. The ANOVA findings also showed performance of manufacturing enterprises could be strongly be predicted by ILW as well as a positive association between ILW solution and performance of the manufacturing companies. Therefore, we can conclude that there is significant relationship between ILW as an ART solution and the performance of Nigeria manufacturing companies and that ILW do have real impact on the performance of the manufacturing concerns. However, stakeholders such as the Government, the Manufacturers Association of Nigeria (MAN) and Security and Exchange Commission, SEC needs to work together to create enabling environment for ART to thrive by sensitization of the industry on the concept and benefits of ART. Pricing of ART is still an issue around the world, the stakeholders including MAN must keep working on it till prefect pricing is attained.  It is therefore recommended that manufacturing companies should conduct comprehensive risk assessments to understand their exposure and determine the most suitable alternative risk transfer solutions.

Keywords: Alternative Risk Transfer Solutions, Performance, Manufacturing Companies.