A Dissertation Submitted to Mzumbe University, Dar es Salaam Campus College in Partial Fulfillment of the requirement for the award of Degree of Master of Science in Business Administration (MBA)This study was assessing the effect of increase in motorcycle claims on the performance of insurance firms. It was conducted at IGT. Both qualitative and quantitative approaches were employed using a sample size of 60 respondents. The main research instruments used were the questionnaire and interview. Both qualitative and quantitative data collected were analyzed using simple descriptive statistical methods such as frequencies, percentages and cross tabulations. The major focus was to examine the financial performance of IGT with the increasing of motorcycle claims, to examine the measures which are being taken by IGT to reduce number of motorcycle claims and to investigate the challenges IGT are facing on handling motorcycle claims. The findings revealed that high claims, unexpected inflation, interest rate change, leverage, volume capital, and tangibility of assets these are the major factors that affect the performance of the insurance companies. It was also revealed that the insurance company needs to be aware of and comply with the professional standards and regulations, such as avoid underwriting irregularities which reduce number of claims as well as that the insurance business, by its very nature, is susceptible to fraud thus it has to appoint insurance assessor who have to make thorough investigation on claims so as to avoid fraudulent claims. The process of settling the claims on time was one of the challenges. Other challenge faced was the way brokers/agents failure to submit the premium on time which affects the compensations to be made to the insured or repudiated. It is recommended that, insurance companies should offer good claims services to their insured which will create positive image of the company and increase number of the insured.