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INSURANCE BUSINESS AND ITS IMPACT ON THE GROWTH OF THE NIGERIAN ECONOMY

CHAPTER ONE

INTRODUCTION

THE LEADING ASSURANCE COMPANY (NIG) LTD

Leading assurance did not progress with 1970. The lead way company was incorporated in 1970 to make out full assurance business in Nigeria. The company registration office is in Kaduna. The Head Quarter of lead way assurance is located at Kaduna town in Kaduna State. They have branches, which are refers to as ‘collecting centres’. These collecting centres are situated in almost every state of the federation. Some of them are found in the following towns, Abuja, Akure (Ondo State), Bauchi (Bauchi state), Ibadan (Oyo state), Port Harcourt (River state) Sokoto (Sokoto state), Zaria (Kaduna state), Warri, Yola (Adamawa state), Gboko (Benue state), Jos (Plateau state), Kano (Kano state), Ikeja (Lagos state), Makurdi (Benue state) and Maiduguri (Borno state).In these companies the following forms of the insurance business are: fire policies, motor vehicle business policies, accident policies, workmen compensation and life assurance policies.

1.1    BACKGROUND TO STUDY

Before the 19th century, there was nothing existing like Insurance business, nevertheless there were some association or communities who were organized in the form of material, social insurance schemes which had the common feature of today’s modern insurance. Among such were the age grade associations, extended family system and the cultural unions. These unions and associations maintained funds collected periodically from members out of which financial assistance were extended to decease members of the family who has experience some calamity. In Nigeria, even up till today, this system of social insurance still exists as part of cultural life or many communities. In addition, we have the emergence of social club of Nigeria the kook kats club of Nigeria among many others which provide some form of social insurance schemes to their members as well as use part of the accumulated premiums for national development and charity donations.

The modern insurance business was first introduced in Nigerian 1921 by the Royal exchange assurance company Ltd and it remained the only insurance company in Nigeria. Until 1949 when three other British owned insurance companies were also established. Before 1921 however, some form of insurance business operated in Nigeria, mainly in marine (for export produce) sector, and a few in the motor insurance sector. One can understand the reason for this because by 1920 records showed that there were about 300 cars and a total of 17 miles of tarred roads in Nigeria, so the chance of knocked down a motor vehicle were very slight. By the time Nigeria got her Independence in 1960, the number of Insurance companies operating in Nigeria had risen to 25. They were all mainly foreign-owned. However, by 1984, there were 88 insurance companies operating in Nigeria most of which are now indigenous companies. In addition to that there were no registered insurance brokers.

Available statistical information that the insurance market in Nigeria has grown rapidly since 1960, not only in numerical strength but also in assets. By 1983, the insurance business in Nigeria attracted a gross premium income of N634 million. The first insurance act was promulgated in Nigeria in 1961 by the federal government known as “the insurance companies Act 1961”. The act introduces for the first the necessity for the registration or licensing of the insurance companies. At the same time there came the marine insurance Act 1961, which still governs the operation in Nigeria.

There were subsequent registration, the most prominent being the Nigeria insurance Decree 1976, which was promulgated to regulate the insurance business the way previous legislation did not do. The federal ministry of finance and the office of the director of insurance altogether control insurance companies in Nigeria and the insurance business. The insurance department of this ministry is responsible for controlling the activities of insurance companies so as to ensure compliance with the provision of Nigeria insurance Decree 1996 and other relevant regulation to the business of insurance in Nigeria. Some of the major insurance companies operating in Nigeria are under the National Corporation of Nigeria, which was established by Decree No. 22 of 1969 to transact the business of insurance in Nigeria.

1.2     STATEMENT OF THE PROBLEMS

Insurance business in Nigeria specifically offers a number of protections to many risks to which the economy is exposed. Insurance companies perform a good number of functions in the Economic development of the country. Prominent among them is: Safe-guarding the immeasurable risks to which capital is exposed and Reducing the burden of loses for the entrepreneur or investors. In as much insurance business facilities safer economic development many mere people are yet to recognize the relevance of this sector of trade. Many, still either impliedly or expressly, mark dissatisfaction over the operation or services rendered by the insurance firms in the nation. The worst of it all, some members of the public do consider insurance companies as registered cheat because they give you time and if it expire them the contract terminate without the insurer benefiting to the money he or she insured and the company now gain the insurer.

1.3      PURPOSE OF THE STUDY

This research word would provide or make you have a complete understanding of the fundamental of insurance business, insurance principles and practice in the country. This approach would enable students of banking and financial studies to appreciate more on the line between insurance and economic development. The research text would not only provide additional knowledge for the user, but would also do more by highlighting the contractual relationship of the insurance companies and their clients.This work would go further forming a basis for any person or group of persons who would like to carry out further research work in this direction of studies. The manual will also prove useful for all students pursuing National Diploma in banking and finance.

1.4      RESEARCH QUESTIONS

The following research questions will guide the study:?

What is the importance of insurance in national building?

How does insurance is improving the standard of living in Nigeria?

What is insurance and assurance, and state the classes of insurance?

How does insurance business facilities economic growth?

1.5   THE SCOPE OF THE STUDY

There have been several forces which militate against the collection of data for this work. Though the researchers have to do the best of their knowledge and abilities to collect the data and also verified it to be true. However as earlier mentioned certain conditions hampered the data collecting exercise high on the list is finance.  The researcher was not adequately equipped with finance for the project to be carried out successfully. Financial strength that would have been a means for easy movement, for the purpose of scouting for data was absent.Time, is also another factor that hindered the researcher from making further research work. The time given for the project was so tight, therefore, most research work were done half way.

 End of course examination was also another obstacle. The researchers could not carry out the work anymore since their examination is almost approaching the situation compelled them to quickly round up the work the way it was not supposed. However, the researchers to the best of their ability strove to make up a better shape of the work. The negative attitudes of the respondents towards supplying information was another scope, the most respondent did not feel secured enough to bear out their minds for the researchers.Scope by sample it is only one insurance company in the country that was selected for study. The insurance company under assessment is the lead way assurance scope Nigeria. Therefore, all the findings are written the scope of the company. May be what would be obtainable in the company will not be found in other insurance companies in Nigeria.

1.6   DEFINITION OF TERMS

Insurance: this is an arrangement with a company in which you pay them regular amounts of money and they agree to pay the cost of the damage e.g. fire disaster.

Assurance: A statement that something will certainly be true or will certainly happen particularly when there has been doubt about it, e.g. death.

Policy: A plan of action agreed or chosen by an organization or it also refers to as a legal document which gives details of the insurance contract by clause and it is binding on both parties involved.

Indemnity: These means restoring someone to his or her formal position

Insurer: A person or company that provide with the insurance contract.

Premium: Is the amount of money that is paid to the insurance company

A slip: An acceptable of the proposal binding the insurance company to issue a policy to the insured.

Cover note: giving a temporary protection for the insured the document usually lasts for thirty day.

The proposal: it’s a reason seeking insurance cover.

Subrogation: This refers to the right which the insurance company has to stand in the place of the insured against other parties who have caused the claim has been paid.

Utmost good faith: Means that all the parties involved in the contract most acts faithfully and honestly both the insurer and the insured must disclose all relevant facts for the contract.

Insurance interest: This phrase means that the insured must have an interest in the subject matter of the policy taken.

Proximate cause: This means that, there must be close connection between the risks insured against the cause of the loss.

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