Download complete project materials Effect Of Insurance Companies In Economic Development In Nigeria
CHAPTER ONE
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INTRODUCTION
1.1 Background of the Study
In business circle today, there are a lot of problems, which a business man cannot measure with his degree of efficiency, and this circumstance crushed many business such as incidents are so several on owners (shareholders of limited company), creditors and other parties that may have invested or are beneficiaries to such business and the economy as well.
Insurance is basically an organized method for the sharing of losses and one modern method of dealing with problem of risk and risks distribution. It is a system under which the risk of one party known as the “Insured or policy holder” is transferred to another party known as the “insurer” in return for a premium paid by the insured to the insurer as consideration for the risk assumed by the insurer, in short insurance is a system in which the losses of individuals or corporate bodies are spread over a large group. The insurance industry has been described as the business that exist in order to ensure the survival of the other business.
Insurance came into Nigeria in the early 18th Century. Though it was not well known and many Nigerians have not come to understand the importance of this financial institutions.
The first insurance company in Nigeria was the National insurance corporation of Nigeria (NICON). It was established under the federal government decree No: 22 of 1969 the corporation started in Lagos but now has branches in most commercial cities in Nigeria. There are also the Nigeria reinsurance corporation established under decree no 49 of 1977.
The Nigerian Deposit insurance corporation (NDIC) established by decree No. 22 of 1988. It was set up to ensure that deposit liability of licensed banks and other deposit taking financial institution operating in Nigeria finally, we also have Nigerian Agricultural insurance company (NAIC) established in 1987 to offer protection to farmers.
The researchers putting all this into consideration decided to find out the problems affecting the smooth running of these corporations in particular and its effects on the economics development. The researcher also hopes to proffer solution to these problems.
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1.2 STATEMENT OF PROBLEM
In order to be insured by the insurance companies the broad knowledge of how the insurance principles can be applied and how the insurance companies can operate is highly necessary since insurance plays an essential and prior role in insuring properties and other collateral securities of the people and the government at large and would not want a situation whereby they we fail to safeguard the asset of the community and government which might have a negative affect on the insurance companies rather they will prefer to insure people’s life and assets that will contribute positively on the insurance companies growth and it will encourage the people to came and be insured under insurance companies.
The problem necessitating this research work therefore are the central role that the insurance information plays in the insurance companies and this involves the nature of risk involved in the insurance companies.
1.3 OBJECTIVES OF THE STUDY
1. The study will make us to understand the effect of insurance companies in economic development in Nigeria.
2. The study will also make us to understand the evaluation of the insurance companies in the business sector.
3. It makes us to appreciate the usefulness of insurance
4. The study also find ways on how the insurance carry out their
5. It makes us to understand how the insurance company carry out their functions.
1.4 RESEARCH HYPOTHESIS
1. Ho insurance companies has no effect on the economic development of Nigeria
2, Hi insurance companies has effect on the economic development of Nigeria.
1.5 SIGNIFICANCE OF THE STUDY
The study will highlight what insurance is all about and their impacts on the business sector of the economy it also aims at fining out the way insurance companies carry out their policies especially when dealing with insured.
This write-up will equally find out any deficiency or loopholes in the management of the insurance companies.
Lastly, the study will be great help to anyone who may be involved in carrying out research in this areas.
1.6 SCOPE OF THE STUDY
The scope of insurance in the study would be the extent and limit of insurance policy cover. Suppose we live in a world of certainties and complete knowledge of everything there would be rest of mind for every individual. Business will prosper as guide will be given as protective measure then there would be no insurance, but we live in a world of uncertainty and fear.
1.7 HISTORICAL BACKGROUND OF INSURANCE COMPANIES IN NIGERIA
To understand how insurance operates in Nigeria, it is important to know the history of insurance in Nigeria the birth of modern insurance in Nigeria is closely associated with the arrival of British trading companies these companies facilitated inter-regional trade in the country.
These foreign companies therefore, needed to deal with some of their risks at a local level. This changed the shape of the insurance sector in Nigeria. These trading companies were given insurance agency license by their foreign authorities from abroad. The license allowed the firms to facilitate claims supervisions and issue covers.
In 1918 Africa and east trade companies inaugurated the Royal exchange Assurance Agency. This was the first insurance company in the history of insurance in Nigeria. Other agencies included.
- Bewac’s legal and general Assurance
- Patterson Zochonics (pz) liver pool
- Law union and Rock
Due to tragic effect of the second world war trade and commerce suffered both in united kingdom and in Nigeria the initial years of Nigerian insurance companies witnessed slow growth between the 1920’s and 1940s. Once the war got over, the insurance companies in Nigeria picked up its pace and made progress that would be embedded forever in the history of insurance in Nigeria.
The first insurance company indigenous to Nigeria was the African insurance company limited in 1958. After the independence there were 25 insurance companies in Nigeria, only 4 were owned by Nigerians. IN 1961 the TC Obande commission report a milestone in the history of insurance in Nigeria was released, this lead to the formation of Nigeria Department of insurance as part of the federal ministry of trade, this department was later transferred to the ministry of finance.
In 1976 an insurance decree was released. This gave authorization to insurers transfers and modes of operations administrative enforcement and guideline and penalties.
1.8 DEFINITION OF TERMS
1. PROPOSAL FORM: It is a questionnaire which the potential customer have to fill to enable the insurance companies to know the type and insurance company to know the type and nature of the policy and whether or not to accept it as well as the decide the amount of premium.
2. PREMIUM: This is fixed amount paid by the insured to the insurer weekly, monthly or yearly for taking up of the policy.
The amount of premium is usually determine by the amount insured for, the risk involved and the number of people insuring against same risk.
3. INSURED: This is the people insuring coverage under the insurance policy against loss.
4. INSURER: Is the insurance company who give the insurance cover and indemnify the insured in the event of loss.
5. EXGRATIAL PAYMENT: This is payment made by he insurance outside it’s legal obligation.
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