THE IMPACT OF INSURANCE COMPANIES TO ECONOMIC DEVELOPMENT IN NIGERIA
| Format: Ms Word | 1-5 Chapters | Table of Content|
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ABSTRACT
This study is aim at critically examine the impact of Insurance Companies to economic development in Nigeria.
It was discovered that insurance companies provided meaningful contribution to economy development. We can says that insurance company indemnity their client when problem in ascertained.
Also insurance company provides assistance to the entrepreneur when the problem is happen.
Finally, insurance company is contribute greatly to the development of the nation by protect financial institution against loss of the capital.
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Insurance has been existence as far as when the people of old realized the gratuity of financial losses.
In actual sense, modern Insurance started in Nigeria in the 20th century with the opening of an agency in Lagos by the Royal Exchange of London in 1921. this company documented all the Insurance business in Nigeria until 1949 when three other.
British owned Insurance Companies joined the scene up till the time the country attained its political independence in 1960. There were about 25 Insurance Companies operating. All except three that were foreign owned. During this period demand for Insurance was dictated by the requirement of the foreign businessmen that brought their goods into their country or exported raw materials to their countries.
All technical matters including investments of found were handedly the expatriate from 1960, the rate at which insurance industries has grown extraordinary. Some of the Nigerian who has earlier on engages. In insurance business individually or group or in partnership with foreigner have now established indigenous insurance companies.
Prior to the incorporation of the first get of indigenous insurance company, effect of foreign insurance companies have under written insurance business in the country. The political independence facilitate speedily period of economic activities.
This led to the formation of indigenous or state owned, insurance companies.
FUNCTION OF INSURANCE
Many writers have extorted the insurance industry by describing its role in the task of natural development and reconstruction, but we will not be labour by listing all of all these functions.
- Insurance provide guarantee to a person that their individual financial loses will be fairly and equitably distributed over the insured community or ground as a whole.
- By offering security to businessman and industrialist, insurance is said to directly and indirectly, protect business enterprises, more so insolvency monies are available to finance and replacement as lost and damaged asset, compensate employee a third parties for injuries sustained, even more willing to innovate and undertake high risk from production so that society is provided with wide range of goods and service.
- Insurance company serves as an effective vehicle for the mobilization of natural resources for the national development effort.
- Insurance company, like other companies is an important employee of labour. This provides job opportunities for the teeming population of this century and helping to solve unemployment problem.
1.2 STATEMENT OF THE PROBLEM
Looking at the topics of the project “The impact of Insurance Companies to economic development in Nigeria” many problem or questions can quickly come to one’s mind. The research work will therefore examine the following pertinent questions. How can impact of insurance be felt and what are the nature and importance of insurance companies to economic development in Nigeria?
How can impacts of insurance companies be measured? Finally, the research work will examine different types of operations and economic significant.
1.3 STATEMENT OF HYPOTHESIS
This section attempt to that hypothesis that has already been put forward in chapter one.
Normally, a text procedure for the hypothesis testing will be chi-square i.e. (Co-E)2 and the level of significant of 5% will be used throughout the testing.
HYPOTHESIS ONE
Ho: There is no significance relationship between insurance companies and their meaningful contribution to the development of economy.
Hi: There is significance relationship between insurance companies and their meaningful contribution to the development of economy.
HYPOTHESIS TWO
Ho: There is no significance relationship between insurance company and their expectation client.
Hi: There is significance relationship between insurance and their expectation of their client.
1.4 PURPOSE OF THE STUDY
The growth of insurance business is a feature key of the modern would. It is a major risk management tool as well as a catalyst of development. In the layman’s language, insurance business can be described as a social device providing financial compensating for the efforts of a misfortune, the payment being made from the accumulating contribution of all parties participating in the scheme.
Insurance serve as safeguard against many risk to which capital fund is exposed. The burden of losses of entrepreneur in commerce and industry is also reduced by the insurance business.
Insurance also provides assistance to business venture. It provides confidence and security needed to businessmen venture into uncertain area of commerce and industry. Insurance plays a major role in the finance of overseas trade.
This will not possible if marine and export credit guarantee insurance schemes were not available. Insurance income accumulated over time in Nigeria investment, thereby encouraging the commercial and economic development of the country.
1.5 SIGNIFICANT OF THE STUDY
The economic significance of the study is the provision of security. In Nigeria, security was providing to an individual by his tribe or the claim, or extended family system. There was also age group, which provided security in various term. As it will be readily appreciated insurance companies protect the business interest of their insured, the policies offered to the public were those generally used by these foreign companies in their home countries.
When independence was achieved in the 1960’s insurance regulatory law were made and put into effect. The control regulations provided for such matter as capitalization, shareholder, margin of solvency, premium and public war dings investment of insurance funds, insurance, intermediaries and qualifications of those engage in insurance.
In everyday life for example, man and his worldly possessions are exposed to many types of risk as human being, we are exposed to the risk of accidents, being attacked by a deadly disease and death, our properties and possession are also exposed to damages that may arise from fire, accident or loss through theft. Insurance has been developed to solve problems poses by the risk, which we are continually exposed. Insurance therefore is a mechanism where by the good fortunes of the many few who do not suffer losses are used to compensate the unfortunates few who suffers losses, by placing them as far as possible in the position which they were immediate before the loss.
Insurance also reduce the burden of losses to the entrepreneurship.
It gives the entrepreneur the confidence and provides him the security needed to venture into uncertain areas.
1.6 LIMITATION OF THE STUDY
This research work has categorically centered this area of insurance such as:
- The usefulness and purpose of insurance company in our economy.
- To see relationship between industry and other financial institutions.
- To create general awareness in the mind of the people.
- To know in which ways insurance company contributes to the economy.
1.7 DEFINITIONS OF TERMS
Endorsement: It is a subsequent term or condition attached to a policy which has the effect of modifying the terms of policy by either restricting, or extending the cover granted by the general policy form. Endorsements have the same effect as the policies to which they are attached.
It is used to limit the issues liable and they are also used for nothing changes in the subject matter of insurance and changes of interest.
Certification of insurance: These are document issued by the insurance to the issued eyes of the law, a policy have no effect unless and until there is delivery by the insurer to the person by when the policy is affected.
The certificate must be in prescribed form. It is of no effect until is a delivered form the insurance to the insured.
Ratification: If the policyholder found there are errors in the policy e.g. property many have been omitted. Some insured document’s man is incorrect.
To protect him, such policy should immediately be returned to, in order to rectify their errors. This is known as ratification.
Cover note: A cover note is a temporary policy document and it is usually issued pending the preparation a limited number of the days ranging from 15 to 30 days. A motor cover note also fulfill the function of a temporary certificate. The insurer has the right to cancel the over note within the period that is in force, but they must give the insured at least 24 hours notice. Before a cover note could be binding on insurer it must be insured by only authorized officially or agent of the company.
Proposal form: This is the form upon which the insured communication his/her wisher to the insurer. The offers is submitted on a purposed form drawn up by the insure which contains series of standard question asking the proposal for information from which the insurer is able to make a proper assessment of the risk. Many insurer accept or reject the risk. If the insurer accept the risk, the contract becomes binding on the proposal for occupied on important position in the practices of insurance.
The proposal form is the first documentary record of the nature of transaction between the parties. The use if standard proposal form enable insurer to consider the application accurately and speedily so that the proposal obtain a quick decision.
Slip: This is very common. In marine insurance, the slips contain an abbreviated description of the risk. The Coyote usually used abbreviations, which are familiar only to this (Lodes specialist).
Claims form: It is issued out by the insurance to the incurred of policyholder wherever it becomes necessary for information from which the insurance is able to make a proper assessment of the claim. The settlement of claim is one of the claims. The settlement of claim is one of the principle functions of insurance company.
Premium: It is a regular sum of many that is payable to an insurance company for an insurance policy.
Policy documents: This is the printed document, which contains the term of the insurance contract. It is the evidence of the contract arising groom the agreement reached by the parties not the control itself. The insured should scrutinize the wording to ensure that it cover the risk he originally proposed. The importance of the policy lies in the fact that in the event of any disputes arising as regards the terms of the contract this can only be settle by referring ambiguities they will be found by the by the provision, of the policy.
In insurance company normally use as standard printed form of policy in most classes of insurance.
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