IMPACT OF LIFE ASSURANCE ON POVERTY ALLEVIATION IN KWARA STATE

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 TABLE OF CONTENT

ABSTRACT

CHAPTER ONE: INTRODUCTION

1.1 Background of the study

1.2 Statement of the problem

1.3 Objective of the study

1.4 Research questions

1.5 Significance of the study

1.6 Scope of the study

1.7 Limitation of the study

1.8 Definition of terms

1.9 Organizations of the study

CHAPTER TWO: REVIEW OF LITERATURE

Literature review

CHAPTER THREE: RESEARCH METHODOLOGY

3.1 Research Design

3.2 Population of the study

3.3 Sample size determination

3.4 Sample size selection technique and procedure

3.5 Research Instrument and Administration

3.6 Method of data collection

3.7 Method of data analysis

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3.8 Validity of the study

3.9 Reliability of the study

3.10 Ethical consideration

CHAPTER FOUR: DATA PRESENTATION AND ANALYSIS

4.1 Data Presentation

4.2 Analysis of Data

4.3 Answering Research Questions

CHAPTER FIVE: SUMMARY, CONCLUSION AND RECOMMENDATION

5.1 Summary

5.2 Conclusion

5.3 Recommendation

References

APPENDIX

QUESTIONNAIRE

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 ABSTRACT

This research work, the researcher examined the impact of life assurance on poverty

alleviation in Kwara state. The information for the study was collected using primary

and secondary methods of data collection. For the primary data collection,

questionnaire was used while existing literature relevant to the topic was consulted for

the secondary data. The sample size was determined using Taro Yamani formula the

percentage method was used for data analysis while Chi-square statistical mode was

used to test the formulated hypothesis. The researcher found out that Life assurance

companies in Kwara specializes in life assurance business but they are experiencing

inadequate patronage. Life assurance companies use brokers, agents and partially

employed salesmen in marketing of life assurance policy to the insuring public. Based

on the findings the researcher recommended that Government should establish

insurance educational centers which should organize lectures, seminars, educational

conferences and study programmes for the good of the public.

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 CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND OF THE STUDY

The development of life assurance can be traced back to as far back as 1983. It was in

this year that we have the first evidence of life assurance known today. A policy was

taken on 18th June 1985 on the life of William Gibbons for a sum of 382. The contract

was for twelve months and the money was to be paid if Gibbons died within twelve

months. He did infact died on 8th may 1984. After a slight dispute over whether twelve

months meant twelve calendar months, the money was paid (Nwite, 2007).

Olufawo (2005) states that, “today, we have thousand of life assurance policies issues in

Nigeria in form of whole life assurance, endowment assurance, term assurance, joint life

assurance etc. interestingly, in advanced countries, life assurance business has become

the greatest area of investment because it even encourage savings.

Lerhari and Wesis (1974) state that, the advantage for policy owner is “peace of mind”,

in knowing that the death of the insured will not result to financial hrardship for loved

ones and lenders. It is possible for life assurance policy payouts to be made in order to

help supplement retirement benefits.

In Nigeria, pension business was handled for many years by insurers until a group sold

the idea of a contributory pension scheme to the government, which former scheme (old

state scheme) where pensioners could not get their pension (benefit) after queuing for

days led to the collapse of the old pension scheme.

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The repeal of the old pension act of 1979 and consequential amendment of the Nigeria

social insurance trust fund Act of 1993 brought in the new pension Reform Act 2004.

Today, the pension fund has grown tremendously and is in excess of N1. 6 trillion,

about 10times the premium of N164.5 billion recorded in the Nigerian insurance sector

in 2008 (Fola, 2012).

In the present dispensation, the sector stands the chance to get boots from some of the

statutory policies set for enforcement. The workmen’s compensation Decree of 1987

provided cover for permanent or partial disability, accident, sickness and death of

worker arising in the course of their employment. Section 9(3) f the Act state that

“employers shall maintain life assurance policy in favor of their employees for a

minimum of three times annual total enrolment of the employee, under the group life

scheme.

According to Aneke (2007) the pension Reform Act for 2004 delegate to the life in

insurers, but their share of the fund depends on their ability to win the confidence of its

huge population. Nigeria is the biggest life insurance market on the continent. He

opined that, it the country’s life assurance business is well positioned it can attain a

leadership position on the continent.

Nigeria, being one of the countries in sub Saharan Africa with high poverty rate, has for

a long time, designed and implemented several policies and programmes if not to meet

the special needs of the poor, at least to reach them. These programmes include: the

establishment of the National Accelerated Food Production Project (NAFPP), Green

Revolution, Agricultural Development Programme (ADP), National Directorate of

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Employment (NDE), People‘s Bank, Community Bank and Small-Scale Industries

Credit Scheme, the Family Support Programme (FSP), Presidential Initiatives on Cocoa,

Cassava, Rice, Livestock, Fisheries and Vegetables, the National Land Agricultural

Development Agency (NALDA), Directorate of Food, Roads, and Rural Infrastructure

(DFRRI), Family Advancement Economic Programme (FEAP), National Poverty

Eradication Programme (NAPEP), National Economic Empowerment and Development

Scheme (NEEDS) and its counterparts at the State and Local Government levels (Nuhu,

2007; Federal Ministry of Agriculture and Water Resources, 2008; Bakare, 2011; United

Nations Development Programme, 2014). Recently, there has been a reorientation of the

government's focus towards developing Community-Based Poverty Reduction using

Community Driven Development approach (World Bank, 2021). In Nigeria, under this

approach, several programmes have been implemented and some are still on. Local

Empowerment and Environmental Management Programme (LEEMP); Community-

Based Poverty Reduction Project (CPRP) and Community and Social Development

Project (CSDP) are social Community Driven Development (CDD)projects while

National Fadama Development Project (Fadama II and III) is economic CDD project

(World Bank, 2021). However, the fact that the incidence of poverty remains very high,

the existence of the various poverty alleviation programmes notwithstanding requires

examination of the factors that contribute to this, especially among the core poor which

is needed for effective targeting of different policies and interventions. Therefore, this

study is set to assess some of the poverty alleviation programmes designed and

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implemented before, during and after SAP. This is to identify the approaches employed

and effects on the poor.

Therefore, it is against this background that this research study will investigates the

growth and contributions of life assurance business in Nigeria.

1.2 STATEMENT OF PROBLEM

The following problems led to the formation of this research work;

a. Sub-standard policies designed by the underwriter’s could not meet the current

change in the society towards satisfying individuals needs.

b. High rate of poverty that result to on interest or concern by the individuals has

affected the development of life assurance policies Nigeria.

c. The low demand for life assurance policies has to greater extent affected the

marketing of life assurance business.

d. Studies has shown that high rate of illiteracy is one of the major problems which

affects the growth of life assurance business in Nigeria.

1.3 OBJECTIVE OF THE STUDY

In this study, the main objective is to examine the impact of life assurance on poverty

alleviation in Kwara state. The specific objectives of this research work include the

following;

a. To examine the effects of sub-standard policies on the development of Life assurance

business in Nigeria.

b. To find out the extent at which high level of poverty in the country affects the

patronage of life assurance business.

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c. To examine the effect of low demand for life assurance policies marketing of life

assurance business

d. To examine the effect of illiteracy on the growth and development of Life assurance

business in Nigeria.

1.4 RESEARCH QUESTIONS

The following research questions will guide the study:

1. What is the importance of insurance in national building

2. How does insurance help in improving the standard of living in Nigeria

3. What is insurance and assurance, and state the classes of insurance

4. How does insurance business facilities economic growth

1.5 Significance Of The Study

The project work will be of immense benefit to the followings:-

1. Students: The study will be useful for academic purpose and it will serve as a date

base for students carrying out further research on the related topic.

2. Insurance Industry: The stud will be useful to insurance companies in Nigeria in the

sense that it will help them in their effort to improve in effective and efficient

management of life assurance in Nigeria.

3. The study will also help to advocate and as well serve as a means of creating more

awareness on the important benefit of life assurance in Nigeria economy.

4. Researchers: The study will provide some useful information to researchers and will

give them the basis for validating or disapproving the findings of the research.

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5. When the public understand what life assurance is all about and begin to patronize

the insurance companies, there will be returnes to the companies who will when pay

their taxed and, the country economy will be affected.

1.6 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.

1.7 Limitation of the study

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

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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 cted for study. The insurance company under

assessment is the lead way insurance 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.

1.8 OPERATION 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.

Insurance: 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.

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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.

1.9 Organization of the Study

This study is organized into five chapters. Chapter one of the thesis discusses the

overview of the study, problem definition, research question, research objectives,

significance of the study. Chapter two presents all the relevant literature review on

waste management and its related concepts. Chapter three addresses the identification

of the most suitable research methodology for this research and chapter four presents a

data analysis of findings gathered from the field. Finally, chapter five presents the

summary of findings, conclusion, and made relevant recommendations.

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 CHAPTER TWO

LITERATURE REVIEW

INTRODUCTION

This chapter which is the literature review would encompass the introduction, impact

of insurance, businesses, the risk that may be insured, types of insurance, the Nigerian

insurance Market, how modern insurance works, fundamental principle of insurance

law and practices, functions of insurance businesses, importance of insurance

businesses in National Economy and the summary of the chapter.

Furthermore, we are going to look and assess the contributions of

different writers on this subject in this chapter, which is the insurance

businesses, and their impact on the economic growth in Nigeria.

Conceptual framework

INSURANCE BUSINESSES AND THEIR IMPACT ON THE ECONOMIC

GROWTH OF NIGERIA.

J.Okafor (1982:8) says that “Insurance can simply be defined as the transfer of risk of

economic loss of the event insured against and the amount paid in insurance of such is

the heart of the typical insurance contract. We all make plans and have expectation on

how our lives will unfold. Experience however, shows that our plans do not follow with

certainty their design are over expected and are not always realized. In most cases,

circumstances always interfere with our plans. The system is therefore developed to

reduce the adverse of financial consequences that may result from random event

intrude to prevent the fulfillment of reasonable expectation.

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According to Hamsell (1987:113), insurance is a social process device to provide

financial compensation for the effects of misfortune, the payments been made from the

accumulated contributions of all parties participating in the scheme.

One of the indices for measuring the growth of an economy is the size and maturity of

its insurance industry. This is because the insurance industries play a very important

role in the mobilization and utilization of investible resources in an economy. It also

acts as the absorber of risks uncertainties normally associated with economic activities,

the absence of a market for which can reduce the growth of economic activity.

The relevance of the insurance industry is even evident in such less developed

economies as Nigeria where the financial system is not very sophisticated and where

there is lack of basic infrastructures required to aid the growth of the economy. The

industry has been playing a very useful role in the economy most notable in the

following areas:

Reduction in the outflow of resources from the country through the retention of

insurance and re-insurance premiums within the economy, with a consequent positive

effect on the country’s balance of payments.

Growth of capital market: The insurance industry constitutes one of the major

institutional investors in the capital market, thereby providing a channel for the

sourcing of funds by both the public and private sector of the economy.

Evaluating insurance consciousness:-The advent of an organized insurance industry

and the activities of its members have greatly improved the cultivation of insurance

consciousness among business houses and individuals. This has reduced the level of

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risk, which generally encourage enterprises and therefore enhanced the growth of the

economy.

Direct equity and loan investment industrial enterprises. The industry is a major

catalyst in the growth of large industrial undertakings, which are capital intensive.

Mobilization of savings. The activities of the industry particularly life insurance

business have encouraged the mobilization of savings which otherwise may not have

been channeled to any productive use such mobilized savings constitute an important

source of long-term investible funds in the economy.

In another paper presented by a leading Nigerian Insurance Administrator Ogunlana

(1973:44-45) while discussing the impact and role of insurance in the present day

economy, he suggested that, “the role and objectives of insurance industry should be

broadened beyond the very traditional role played by the industry in growth countries.

He further states that; “To determine the man power needs of industry it is only logical

to ascertain, in the first instance the objectives of the industry”.

In addition to the impact of insurance businesses to the growth of the economy, it plays

a prominent role in provision of life policies, which can be used as a collateral security

when obtaining a loan while the value of real estate and other mortgaged properties

covered by general insurance is greatly enhanced.

FUNCTIONS OF INSURANCE BUSINESSES

Hamsell (1987), in his publication, "Elements of insurance" broadly divided the function

of insurance into two, namely the primary and secondary function.

THE PRIMARY FUNCTION

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The primary function is the indemnifying of the individual policyholders for losses or

damages and also provides other valuable services to the individual. The policyholder

or the insured community pays premium into a common pool out of which the

unfortunate few who suffer losses are compensated.

THE SECONDARY FUNCTION

The Insurance Company provides a number of secondary functions, which are of great

value to society and country in general. It offers financial security to businessmen and

women uncovering and promotes trade, commerce and commercials enterprise. These

include:

Investment: Insurance play an important role in the economy buoyancy of the nation by

investing part of the premium collected to earn interest on government securities,

mortgages, individual loans.

Reduction of losses: It help to reduce losses by the recommendation made by their

surveyors, rating system applied for good and bad risk, allowance of discounts for

security in fire and burglary insurance. All these encourage care and serve as

inducement to reduce losses.

Assistance of Business Enterprise: Large business enterprise required the insurance

assistance to enable them function well. Most of their fire, theft, equipment damages

and capital risk are shared to insurers.

Cost of social services reduction: Premium contributed by the insured is saving in the

period of loss or damage, the proceeds claim paid by insurers help to reduce cost of

social services by the state, claims and third party liability and life. Individuals

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conveniently meet their general expenses where the state could have shouldered the

responsibility.

Invisible Exports: In overseas trade transaction and balance of payments, insurance like

banking and shipping contributes the invisible exports of the nation. Local legislation

prohibitions transfer of foreign exchange. Some monies are invested locally.

THE RISK THAT CAN BE INSURED

Life is full of risk, and risk is inseparable from life. Some risks are insurance while some

are not.

According to Irukwu (1988), risk can be literally defined as that thing that occurs to an

individual in form of loss something which could be detrimental to the individual party

or fully. He further states that there are several kinds of risks against which people may

wish to protect themselves; farmers may wish to protect themselves against poor

harvest that may result from risks of locusts’ invasion or from any other danger.

Williams and Heins (1971), sees risk as the variation in the possible out comes that

exists in nature of a given situation. But Willet (1951), view risk as the objectified

uncertainty regarding the occurrence of an undesirable event.

To qualify for an insurance coverage, a risk must have certain characteristics. For

instance, before any person can be allowed to take insurance policy for any property, he

must evidently have sufficient interest in the property. This does not mean that a person

must have absolute ownership of a property before he could be regarded as having

sufficient interest that can enable him to take insurance.

The risks that can be insured is called insurable risk such risk must result from the fact

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that the circumstance was beyond the control of the person involved. A man who

commits suicide cannot hope to benefit from insurance even if he already had a life

policy. Once the proof of premeditation is evident and accident cannot be established as

the basis or the cause of loss, the loss would no longer be tolerable under insurance.

TYPES OF RISK

Pure Risk:- is a risk where the event has two possibilities i.e. status quo or loss, for

example destruction, damage or theft of a car.

Pure risk consequences are certainty insurable, but not the speculative risk itself. The

provision of insurance may act as a distinct disincentive to efforts of realizing the gains

of speculative risk, because the policy would pay up in the event that no gain is

realized. It should be noted that not all pure risks are insurable but speculative risk are

normally not this implied that insurance is based on the expectation of pure risk

circumstances, that is a loss or no loss situation and not that of a speculative risk a

chance of loss or gain-chartered insurance institute (1999:11-14)

Special Risk:- It involved an element of desirability of gain as the motive for entering

into the activity . Speculation represents three possibilities, loss or diminution, status

quo or gain/profit. Example is investment in equities or into a new market.

Fundamental Risk: - It affects a large section of the community than individuals. It is

always a catastrophe and a disaster. Example: war, drought, natural and physical

phenomenon.

Particular Risk: - Consequences of these risk effects restricted to individuals. It has its

origin restricted to a particular individual.

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Finally, the probability of loss in an insurable risk should be possible to draw upon

statistics, which will reveal the frequency of occurrence of loss in certain classes of risks.

Varied as human experience, occupations and social experience are, available insurance

coverage’s and polices vary from class to class.

TYPES OF INSURANCE

There are numerous type of insurance policies, the researcher for the purpose of this

study has gone through a lot of published work among which includes IRUKWU

(1988), OKWOR (1981), ABODERIN (1988) and ATOKO (1989), they agreed that the

major ones are classified into two broad groups these include: -

Life business

Non- life business

The life business consists of the life and health, while the non-life consists of fire,

marine, motor, aviation, accident, workman compensations and miscellaneous business.

FIRE INSURANCE: -

This provides cover against loss or damages to insured properties such buildings,

contents including furniture and fixtures, plant and machinery, stock of raw materials

and finished goods, appliances, office equipment, household and other properties

resulting from fire, lightening explosions, bush-fire, tornado, flood and civil

commotion.

Fire insurance contract is an agreement between two parties, the insurer and the

insured, whereby the insurers in return for consideration (premium) undertaking

during the period of insurance to indemnify the insured up to property as damage by

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the fire and other special perils.

TYPES OF FIRE INSURANCE:-

Special Perils:-This covers perils of chemical type instance, explosions, fermentation,

riots, civil commotion, malicious damage, thunderbolt, bush fire and hail.

Ordinary Fire:-Covers accidental materials damage to property insured including

building. These include fire arising from a dual civil commotion, earthquake, explosion

by fire and spontaneous contusions

Loss of Profit: - is an ordinary fire policy on building or contends provide cover against

material loss of capital but no protection against loss of revenue during the period or

interruption of business. Fire insurance generally protects capital invested in building

and their contents whether their capital represents the savings of the small industry

concerned huge resources.

MARINE INSURANCE

This covers hull, cargo and freight. This type of insurance enable ship owners not to free

portions of their capital as reserve fund for the loss of their vessel and make it possible

for rapid expansion and growth of the import and export trade.

In another way it is a collateral security which enable the banks to accept responsibility

of advancing funds against documents of title (Nigerian experienced a remarkable

growth of industries in both the private and public concerns/ Heavy importation of

plants, machinery and raw materials for these projects was a boost to marine insurance

and a savings of foreign exchange since 1976.

LIFE INSURANCE

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This type of policy to which it is characterized such that the person insured pays special

premium at regular intervals and the amount to which he is covered is payable on his

death. When you take life insurance policy, it enables you to save money for your old

age when your income earning capacity may have reduced considerably even up to

zero. As such a time, you will be able to fall back on your life insurance policy by which

the insurance company will take of you at your old age. Life insurance is subdivided

into three types; Term insurance policy, Whole life policy and Endowment policy.

Term insurance is very useful where your need for protection is for a limited period.

But where the need for protection is a longer period/ and is even permanent, whole life

insurance will be the appropriate policy to buy.

Endowment policy is a form of investment or saving scheme for the insured. The

insured himself can receive benefit from the policy. For term insurance, the limited

period may be one to five years.

MOTOR VEHICLE POLICY

Motor vehicle insurance is one of the type of insurance which is undertaken to cover

motor vehicle against risks. There are three categories of motor vehicle insurance policy

namely:

a. Third party policy

b. Third party, fire and theft policy

c. Comprehensive policy

Third party policy:

This is policy that cover to third party only, this that provide compensation to third

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party’s property damage, body injury or death caused by the insured.

Third party - fire and theft policy

Such a policy provides compensation for third party’s property damage, damage to

insured vehicle by fire and in case the vehicle is stolen.

Comprehensive policy

Insurance covers a motor vehicle against physical damage losses arising from fire, theft,

falling objects and various other perils and including third party liability for death,

injury damage to property.

WORKMEN’S COMPENSATION INSURANCE

This is guided by the workmen’s compensation decree now Act 17 of 12th June 1987. It

covers insured employees against personal injury by accident or disease arising in the

course of employment. This is for all sums, which the insured shall be liable and will in

addition be responsible for all expenses incurred i.e. legal fee with its consent in

defending any claim for such compensation.

Under the workmen’s compensation insurance, there are various classes of benefits

open to workers. These include medical, temporary incapacity and permanent

incapacity.

BURGLARY INSURANCE

This provides insurance cover for loss to Insured property or any party they’re of

belonging to them or held in trust or on commission whilst contained within the

premises. If the loss is coursed by theft or armed robber, but only if accompanied by

actual forcible and violent breaking into or out of the building or any attempt there at,

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or if there shall arise any accompanying damage to the property insured.

THE NIGERIA INSURANCE MARKET

A market is often regarded as a place where people meet to transact business. Sellers

and buyers are physically present at such a place, which may be a building or an open

space. The Insurance market, like any conventional market is a place, an environment,

or a process through which buyers and sellers of insurance policy come together for the

purpose of transacting business in insurance. Thus, the insurance market does not have

a physical location. It is a process or a system.

According to Godwin (1985:10), “the Nigeria market is facing greatest problem of the

market at present is acute shortage of trained and knowledgeable personnel. Hence in

order to be able to cope with the future challenges, insurance manager must try to

increase the trained tempo on the job and institution of higher learning.

Osuola E. C. (1993:5) says that “insurance was introduced into Nigeria in the first

quarters of the 20th Century, by early British merchants who established training post on

the invest coast of Africa”. Osuola further says that, “the business was hitherto

conducted in skeletal agency arrangement until 1921, when the Royal Exchange

Insurance Company Limited opened its Office in Lagos. This company dominated

practically all the insurance business for almost 30 years and its monopolistic was

broken in 1949 when other three British owned Insurance Company enter into the

market. By the time of independence in 1960, the number of insurance company has

increase to 25 and two to three out of them were owned by the foreign country. From

1960, the number of insurance had increased eased to 109’ The Nigeria insurance

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market is very active member of the international insurance market. It offers

opportunities for members of the general public to obtain insurance cover. This may be

done directly with any insurance company or industry through insurance brokers,

agents and other intermediaries who work closely with the insuring public to secure the

best insurance covers for their customers. In Nigeria, the structure of insurance market

include the sellers (that is, insurance businesses and reinsurance businesses), the

intermediaries (that is, brokers and agent) the buyers (that is, the insured), the market

associations (which include the Nigeria Insurers Association, the chartered Insurance

Institute of Nigeria, the Nigerian corporation of Insurance Brokers, and Institute of Loss

Adjuster of Nigeria), and the regulatory or supervisory body (that is, the National

Insurance commission), Source an In house Workshop by Cornerstone Insurance Plc.

“Introduction to Insurance”.

According to Babalola (1989),in a speech delivered, in a seminar at Abuja. He said the

insurance market is a free market environment, which encourages competition and

participation by local and foreign investors. The regulatory environment is geared only

towards the substance of ethical standards in insurance policies and toward sustaining

the confidence of the general public in the insurance market. It is not kind of stifling

intervention about which free market proponents usually complain.

This is because the federal government of Nigeria has always limited its intervention in

the insurance market to the provision of regulatory measures that ensure the healthy

growth of the industry. The nation’s independence in 1960, Nigeria’s insurance market

was almost totally free of any form of government regulation and control. This was in

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part due to the prevalence of foreigners, mostly British Insurance businesses whose

home laws were believed to have adequately taken care of the operation of businesses

in the colony so, at independence, the only laws of considerable significance on

insurance were the motor vehicles (third party) ordinance of 1945 and the motor

vehicles (third party) Act of 1958. At that time, once incorporated just any company

could operate as an insurance firm.

A stricter requirement came in 1961 through the marine insurance Act and the

insurance company Act, and later in 1964 by the insurance (miscellaneous provision)

Act. That was when the law required that only businesses that were so specifically

registered after their incorporation under the businesses Act could operate as insurance

businesses. The law required that such businesses must upon registration state the

classes of insurance they proposed to operate. The insurance businesses were required

also to submit their audited account to the registrar of insurance. In spite of all these,

still, there existed certain anomalies and sharp practice, which the government

considered lnimital to the growth of the insurance industry in the country. Liquidation

of such businesses were rampant (and the insured would lose huge resources) just as

many of the insurance businesses refuse to pay claims.

Therefore, in 1968 the federal government promulgated the Nigeria businesses’ decree,

which introduced more string requirements for insurance businesses. It directed that

each company should produce certified true copies of premium rates, rating plan, rules,

and standard policy forms of each class of insurance, together with a certified copy of

audited accounts showing the financial position of the company. For businesses that

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were established under the 1968 decree, the required paid–up share capital for those

transecting all classes of insurance become 100,00 for those with life only N50,000 and

those with all classes of insurance was raised to N100,00 or 50 percent of premium

income which ever was higher , while the solvency margin for those dealing on life only

become N50,000 or Percent of premium income which ever was higher , and for those in

all classes of insurance except life N50,000 or 10 percent of latest year premium income,

which ever was higher.

In spite of these stringent foundation requirements by the law, the market remained too

open to all comers who entered at will and quit at will. There were all manners of

insurance businesses who did ever thing to satisfy the formation requirement, collected

premiums from the public, but once faced with claims obligation, either blatantly

refused to pay, or pay low compensation or even go into self liquidation on one pretest

or another.

Therefore, the need to ensure adequate protection for policy holders from the

consequences of the failures of poorly managed insurance businesses led the

government to introduce regulatory measured over the activities and operations of

insurance businesses, brokers, loss adjusters, agents, and insurers.

The aim was to fully protect the insuring public who are usually regarded as the weaker

partly to the bilateral contracts of insurance. All these constitute the intermediate

measures the government takes in its concern for the protection of the insurance and the

national economy.

HOW MODERN INSURANCE WORKS

26
In any classes of insurance each members of an insurance group know as the insured,

the assured or the policyholder pays a relatively small amount of money into a common

pool administered and control by the insurer. Which is usually an incorporated

insurance company (under the company and allied matter decree 1990) with limited

liability return for a payment which is called premium, the insurer agrees assure the

insured risks and under taken to indemnity the insured against losses arising from

specified period insured against. The term of insurance agreement are embodied in a

document, which is known as a policy. When the insured loss occurs, the insured will

report the event to the insurance company, the Insurance company will look at the

genuinely of the claim, if truly he suffered the loss and all the necessary terms of

agreement are not breach then the company compensate the agreed sum to the insured.

In the early days of insurance, mutual insurance operates on the assumption that only a

few of the risk. Insured against will materialize; as such the insurer will be left with

some profit at the end of each insurance period. The modern insurer operates under a

sight more sophisticated system than early mutual insures. Un like mutual insurer the

modern proprietary company has both policyholders and shareholders and interest of

each group has to be protected. The modern insurance work on the assumption that the

premium received over their business will be enough to meet the claims arising

together with their working expense and leave him a small profit.

The assumption is based on the theory of the total premium, fund being atrophic

events, producing a rest accumulation of claims amending to more than the premium

fund, the insurer is required by law to maintain a specific relationship between it’s asset

27
and premium income that is his liabilities assumed.

FUNDAMENTAL PRINCIPLES OF INSURANCE LAW AND PRACTICES

Like other professionals, insurance practitioners operate with some principles that have

been upheld by the courts over time and some codified in statutes. These are the

principles and doctrines upon which insurance is based.

Recently, changes have been made by appropriate authorities to reflect the changes as

well as peculiar problems of our society.

The principles are:

a. Insurable interest.

b. Utmost good faith.

c. Indemnity.

d. Subrogation.

e. The subject matter.

f. Proximate case.

INSURABLE INTEREST

The insurable interest is the legal right to insure arising out of a financial relationship

recognized by law between the insured and the subject matter of insurance. By this, the

proposer stands to lose by the destruction or loss of the subject matter insurance and

again in the retention of the status quo.

The subject matter of insurance can be informed of property or event that result in a loss

of legal right or creation of a legal liability for example, a building its content or liability

at law for to other property.

28
UTMOST GOOD FAITH

The second fundamental principle governing insurance transaction is that of utmost

good faith, under the general law of contact, there is each party to contract is entitled to

make the best bargain he can and so long as he does not make a false or fraudulent

statement, he need not to draw the attention of the other party to anything that

influenced his judgment.

INDEMNITY

This can described as the financial compensation made available to place the insured in

the sane financial position that he occupied immediately before the loss. The insured is

not entitled to receive anything in excess of the monetary extent of his loss and he will

receive less than this if any limitation in the policy operates. An insured is not allowed

to make a gain from an insurance contract.

SUBROGATION

Subrogation is the right of one person having indemnified another under a legal

obligation to do so, to stand in the place of that other and avail himself of all the right

and remedies of that other whether already enforced or not. Subrogation therefore

allows the insurer to recoup any gain the insured might make from an insured event.

These rights are usually pursued in the name of the insured.

THE SUBJECT MATTER

The subject matter of insurance may be some material, property of value, for example a

motorcar or a house. Alternatively, it might be an event the happening of which will

create a legal inability for example, the insurance policy taken by a doctor insuring

29
himself against a possible claim by a patient for professional negligence.

PROXIMATE CAUSE

The standard legal case of PAWSERY V. SCOTTISH UNION and national (1902),

defined proximate cause as the active efficient cause that sets in motion a training of

events brings about a result a new and intervention of any force started and working

actively from a new and independence source. In order words, this principle stated that

there must be a close connection between the loss actually suffered and the risk for

which insurance has been taking out. The insurance company will not be liable if risk

other than those insured involved. Thus, if when filling out a proposal form, the

insured are required to state the names of people who will normally drive a car under

which insurance policy is taken. If the car isinvolved in an accident driven y another

person other than those stated in the form, the insurer will not pay compensation

because the person driving the car is not covered by the policy.

IMPORTANCE OF INSURANCE BUSINESSES IN THE NATIONAL ECONOMY

The society is changing at a very fast rate than over before, people no longer their

brothers keepers and the attachment for extended family is gradually eroding, the

economic condition is daily and gradually dwindling which no doubt has lead to the

closured of some businesses and as a result, the fate of the laid off employee who has

spend most of their working life toiling for the employer now a mirage. NICON

Historic strides (1999:21) One finds it difficult to talk of purpose of insurance without

linking it with its economic importance, which rest on economic and social benefits.

Insurance businesses are establishing to make profit, which in turn accumulates and

30
makes profit, which generate economic growth through investments.

The economic importance of insurance is outlined as follows: -

Insurance reduceslosses, both the policyholders andthe entire community are

affected in one or the other by the losses, weather or notthere is insurance. Insurance

provide services, which reduce the amount of loss through research into loss

prevention.

Insurance offers assistance to business enterprise by absorbing most of the risks in their

operations, considerable amount of capital are sunk in industries giving rise to risks of

fire, theft and damages, insurance therefore venture unto new risk without fear or loss.

Thus without insurance such needed capital must necessarily be put side against the

possibility of loss, thereby safe guarding capital and freeing it for further investments in

business.

Another importance of insurance is the equitable distribution of loss, by the payment of

premium, each policyholder contributes to accentual fund (pool) and is managed by the

insurance, it is the fund that accumulates for economic investments.

Insurance is of great importance company in the wheel of national socio- economic

growth in the sense that it is an important segment in social, industrial and commercial

life.

Insurance aims at guarantying reliability, viability, solvency, managerial efficiency and

probity in protection of the legitimate interest of the policyholder, third parties and the

public at large. Without the security of insurance cover, destruction of personal

possessions and industrial undertakings could not operate as banks and similarly, large

31
commercial and industrial undertakings could not operate, as banks would be relevant

to finance them. Sources an In house Workshop by Cornerstone Insurance Plc.

“Introduction to Insurance”.

Theoretical framework

Life insurance framework (Lewis 1989)

Demand for life insurance has usually been explained through the life-cycle models

where households or individuals maximize their expected utility of lifetime

consumption. The issue of life insurance demand is not new for western researchers

and was brought to light beginning from Yaari (1965), who was the first to work out a

theoretical background to explain the demand for life insurance. Yaari was the first

researcher who pointed out the issue of uncertainty in the life insurance demand,

namely, the uncertainty of life span of a consumer. He developed the life-cycle utility

model of a consumer together with deducing the optimal consumption and optimal

saving plans of a consumer and his results show that individual increases his expected

utility by buying the insurance. In his paper Yaari highlighted the models of utility

functions developed by Fisher (1930) and Marshal (1920), who as he said “were both

aware of the uncertainty of survival, but for one reason or another they did not

expound on how a consumer might be expected to react to this uncertainty if he is to

behave rationally” (Yaari, 1965). Thus the distinguishing feature of his paper is the fact

that he included the lifetime uncertainty of a consumer in his model, disregarding all

other uncertainties that a consumer must face (like an uncertainty of future income).

Previously researchers paid very little attention to this aspect. As insurance is regarded

32
to be a mechanism of reducing the consumption volatility of a household, the

uncertainty of a life expectancy determines the life insurance consumption. Later Karni

and Zilcha (1986) implemented the measure of risk aversion in the model. They

followed Fisherian model, which was used by Yaari (1965) in his derivations, because it

does not account for bequests, so the individual is free in accumulating debt, which

helps to properly model the improvement in borrowing conditions, which in chain

leads to higher consumption of life insurance. A bunch of papers were written on the

base of household surveys’ data, where the theoretical life-cycled models were

developed and empirically supported to investigate the behavior of households in the

demand for life insurance (e.g. Lewis (1989), Bernheim et al. (2001), Lin and Grace

(2006)). Lewis (1989) used the life insurance framework developed by Yaari (1965) in his

paper extending it in the sense that he included in his model the preferences of other

members of the household, which is empirically reasonable, because while making a

decision about insurance the insured explicitly takes into account the dependent

members of the family. So the total amount of life insurance purchased by the insured

(assuming a husband is a primary wage earner) is derived from the maximization of the

consumption level of wife and offsprings (beneficiaries), who in turn maximize their

utility of the consumption by choosing the optimal level of expenditures on life

insurance. According to the developed model, life insurance purchase increases with

the present value of beneficiaries’ consumption, risk aversion and probability of policy

holder’s (husband’s) death.

Interesting is the fact that nearly all authors, who investigated the life insurance

33
demand, related to the theoretical framework developed by Yaari (1965) as to initial

point. Rudolf Enz (2000) argued in his paper that models with constant income

elasticity of life insurance demand are artificial in the sense that they do not take into

account different restrictions in insurance penetration growth. He studied the

relationship between demand for insurance and economic development. As the

constraints for insurance penetration he analyzed tax system, regulation etc. Thus

allowing the income elasticity to vary Enz (2000) showed an S-curve relationship

between insurance penetration and income per capita level. S-curve relationship

indicates that the consumption of life insurance tends to grow as the economic level of

the developing country rises, but as the time passes and the economic level of that

country is reaching the level of developed countries the insurance consumption slows

down. Using his model it is possible to build a long-term forecast for insurance demand

and investigate the reasons for countries (so-called outliers) to be located away from the

S-curve on the plot. The main reason of purchasing the life insurance is to handle the

possible future risks of lifetime, of earnings etc. Papers of Bernheim et al. (2001) and Lin

and Grace (2006) both highlighted the issue of the linkage between the life insurance

demand and financial vulnerability of the households of an older age. Vulnerability

indicates the degree of household sensitivity to the loss of income as a result of death of

a spouse. Based on developed models they found different results, namely: Bernheim et

al. (2001) did not find any significant relationship between demand for life insurance

and financial vulnerability. What they found is a surprising result that people with

greater vulnerabilities tend to insure less, and those who experience smaller

34
vulnerabilities purchase larger amounts of insurance. Comparing to the earlier

researches of the topic Bernheim et al. (2001) extended their model with various factors

that affect the purchase of life insurance such as household composition, economies of

living together in household, details of tax system of the country etc. However, Lin and

Grace (2006) went further in their research and introduce several changes to the

Bernheim’s study (like a decomposition of the overall demand into demand for term life

and whole life insurance, addition of index of financial vulnerability etc.) and as a result

they found the relationship between demand for life insurance and financial

vulnerability. They conclude that the elder the household the less life insurance it

demands to cope with the certain level of financial vulnerability.

Empirical Review

Usually empirical studies take into account the demand side factors of life insurance as

well as the supply side factors. The studies, which aimed to investigate the differences

in life insurance purchase between countries, have traditionally used cross-sectional

analysis or panel data analysis. Outreville (1996), Ward and Zurbruegg (2002), Beck and

Webb (2002), Sen (2007), Li et al. (2007) show the benefits of investigating the life

insurance demand across countries. The above mentioned researchers used various sets

of different countries. Beck and Webb (2002), for instance, explored the differences

between 68 countries all over the world using unbalanced panel data for 1961-2000. The

countries included in this study were both developed and developing; however, they

only partially covered the CEE region (Bulgaria, Czech Republic, Hungary, Poland,

Slovenia) and did not include the former USSR countries in the sample. Same applies to

35
other researches. Ward and Zurbruegg (2002) performed pooled cross-section OLS

regressions and panel regressions on two samples: OECD (countries-members of

Organization for Economic Cooperation and Development) and Asian countries. The

study of Li et al. (2007) focused on 25 solely OECD countries. Consequently, these

studies pay no special attention to the factors which are more corresponding to the

demand for life insurance in CEE and CIS countries. Sen (2007) investigated the life

insurance sector in 12 selected Asian countries over 11 years. Outreville (1996) used

cross-sectional analysis to examine 48 developing countries for the year 1986. The

burgeoning life insurance market cannot be completely explained by rise in income

level of the society, but also by important changes in values that enhance the motives to

own life insurance. Following early researchers (Yaari (1965), Fortune (1973)) the

demand variable should depend on such core indicators as wealth, income level,

interest rates and prices. Peter Fortune (1973) investigated the US insurance market for

1964-1971 and found a high degree of sensitivity between the optimal amount of life

insurance, wealth and the real interest rate. He was first to focus on the sensitivity

relationship between life insurance purchase and financial variables, and linked his

implications with the monetary policy and capital markets. Outreville (1996) in his

study of 48 developing countries highlights the fact that financial development of the

country influences the life insurance demand in it and he found the significantly

positive relationship between life insurance purchase and the financial development.

Another important finding, supported also by other researchers (Lewis (1989)), has

shown the significant positive relationship between the use of life insurance and income

36
level. However, no relationship was found between human development indicator and

life insurance demand, even thought HDI correlates with financial development.

Outreville also takes into account the level of competition on the domestic market and

its openness to the foreign participants.

Beck and Webb (2002) made a comprehensive research over 68 countries of the world,

paying attention to the question what causes the variance in life insurance consumption

between different countries. They use four different measures of life insurance

consumption and incorporate various economic, demographic and institutional factors

in their research. As a result, they find that countries with higher income per capita

level, more developed banking sector and lower inflation tend to consume larger

amounts of life insurance. In addition, life insurance consumption is observed to be

positively influenced by private savings rate and real interest rate. Such demographic

factors as education, life expectancy, young dependency ratio appear not to have any

robust influence on the life insurance consumption.

Beck and Webb (2002) following Outreville (1996) also highlight the role of financial

development and price stability in the insurance market of the country.

37
 CHAPTER THREE

RESEARCH METHODOLOGY

3.1 INTRODUCTION

In this chapter, we described the research procedure for this study. A research

methodology is a research process adopted or employed to systematically and

scientifically present the results of a study to the research audience viz. a vis, the study

beneficiaries.

3.2 RESEARCH DESIGN

Research designs are perceived to be an overall strategy adopted by the researcher

whereby different components of the study are integrated in a logical manner to

effectively address a research problem. In this study, the researcher employed the

survey research design. This is due to the nature of the study whereby the opinion and

views of people are sampled. According to Singleton & Straits, (2009), Survey research

can use quantitative research strategies (e.g., using questionnaires with numerically

rated items), qualitative research strategies (e.g., using open-ended questions), or both

strategies (i.e., mixed methods). As it is often used to describe and explore human

behaviour, surveys are therefore frequently used in social and psychological research.

3.3 POPULATION OF THE STUDY

According to Udoyen (2019), a study population is a group of elements or

individuals as the case may be, who share similar characteristics. These similar features

can include location, gender, age, sex or specific interest. The emphasis on study

38
population is that it constitute of individuals or elements that are homogeneous in

description.

This study was carried out to examine the impact of life assurance on poverty

alleviation in kwara state. The residents of ilorin east local government area of Kwara

State form the population of the study.

3.4 SAMPLE SIZE DETERMINATION

A study sample is simply a systematic selected part of a population that infers its result

on the population. In essence, it is that part of a whole that represents the whole and its

members share characteristics in like similitude (Udoyen, 2019). In this study, the

researcher adopted the convenient sampling method to determine the sample size.

3.5 SAMPLE SIZE SELECTION TECHNIQUE AND PROCEDURE

According to Nwana (2005), sampling techniques are procedures adopted to

systematically select the chosen sample in a specified away under controls. This

research work adopted the convenience sampling technique in selecting the

respondents from the total population.

In this study, the researcher adopted the convenient sampling method to

determine the sample size. Out of all the entire population of residents of ilorin east

local government area of Kwara State, the researcher conveniently selected 65 out of the

overall population as the sample size for this study. According to Torty (2021), a sample

of convenience is the terminology used to describe a sample in which elements have

been selected from the target population on the basis of their accessibility or

convenience to the researcher.

39
3.6 RESEARCH INSTRUMENT AND ADMINISTRATION

The research instrument used in this study is the questionnaire. A survey containing

series of questions were administered to the enrolled participants. The questionnaire

was divided into two sections, the first section enquired about the responses

demographic or personal data while the second sections were in line with the study

objectives, aimed at providing answers to the research questions. Participants were

required to respond by placing a tick at the appropriate column. The questionnaire was

personally administered by the researcher.

3.7 METHOD OF DATA COLLECTION

Two methods of data collection which are primary source and secondary source were

used to collect data. The primary sources was the use of questionnaires, while the

secondary sources include textbooks, internet, journals, published and unpublished

articles and government publications.

3.8 METHOD OF DATA ANALYSIS

The responses were analysed using the frequency tables, which provided answers to the

research questions. The hypothesis test was conducted using the pearson correlation

statistical tool, SPSS v.23

3.9 VALIDITY OF THE STUDY

Validity referred here is the degree or extent to which an instrument actually measures

what is intended to measure. An instrument is valid to the extent that is tailored to

achieve the research objectives. The researcher constructed the questionnaire for the

study and submitted to the project supervisor who used his intellectual knowledge to

40
critically, analytically and logically examine the instruments relevance of the contents

and statements and then made the instrument valid for the study.

3.10 RELIABILITY OF THE STUDY

The reliability of the research instrument was determined. The Pearson Correlation

Coefficient was used to determine the reliability of the instrument. A co-efficient value

of 0.68 indicated that the research instrument was relatively reliable. According to

(Taber, 2017) the range of a reasonable reliability is between 0.67 and 0.87.

3.11 ETHICAL CONSIDERATION

he study was approved by the Project Committee of the Department. Informed consent

was obtained from all study participants before they were enrolled in the study.

Permission was sought from the relevant authorities to carry out the study. Date to visit

the place of study for questionnaire distribution was put in place in advance.

41
 CHAPTER FOUR

DATA PRESENTATION AND ANALYSIS

INTERPRETATION

INTRODUCTION:

The aim of this chapter is to present and analyse the data collected from the staff of

NICON Insurance Corporation and other insurance businesses. Therefore the data are

presented in a tabular form and are analyzed accordingly. Data were collected through

questionnaire, observation, personal interview and existing documents in the

corporation. A total of fifty (50) Copies of questionnaire were administered; and they

were completed by the staff of NICON Insurance Corporation and the employees of

other Life assurance businesses with offices in enugu. However, not all the respondents

responded to the all questions as expected.

Based on the questionnaire and other research method used, the presentation, analysis

and interpretation of respondents’ answers are as follows:

QUESTION 1: Your Sex?

Table 1

SEX NO OF RESPONDENTS PERCENTAGE

MALE 34 68%

FEMALE 16 32%

50 100%
TOTAL

Source: Field work

Comment: The result obtained from the respondents as shown in the table 1 indicates

42
that 34 of them were male and 16 were female given 68 percent and 32 percent

respectively, which is in favour of male but still it is a good growth to have such a

number of female staff in the insurance industry. Even though, the number of student

graduating out of university from this profession are very few and also the

professionals in the field are limited in number it shows that female has really come of

age.

Question 2: For how long have you been in Insurance business?

Table 2:

NO OF YEARS NO OF RESPONDENTS PERCENTAGES

0-5 7 14%

6 - 10 8 16%

11 – 15 21 42%

Over 15 Years 14 28%

TOTAL 50 100

Source: Fieldwork

Comment: Table 2 reveals that only 14 percent of the working population out of 50 are

in the Insurance industry for 0-5 years, which is an indication that the insurance

industry is not recruiting new staff. The insurance businesses mostly depend on their

old staff as indicated in Table 2, that is, over 40% of their staff have 11–15 years working

experience. When you combine this with those with experience of over 15 years, you

obtain a staggering proportion of 70%. This undermines the recruitment policy of fresh

graduates in the country.

43
Question 3: Trade cannot achieve its desired goals in a nation without the

aid of insurance businesses?

Table 3

OPTION NO OF RESPONDENT PERCENTAGE

Strongly Agree 34 68%

Agree 11 22%

Disagree 3 6%

Strongly disagree 2 4%

TOTAL 50 100%

Source: Fieldwork

Comment: Table 3 revealed that 34 respondent out of 50 representing 68 percent of the

total population strongly agree that trade cannot achieve its goals without the aid of

Insurance, which is quite obvious as the saying goes that Insurance act as the senior

prefect for the economy which holds the ace for the proper direction of the growth of

the nations economy. Hence the responses of 68% as against 22% confirm the relevance

that trade cannot achieve its objectives without the aid of Insurance, which provides full

security coverage in the event of risk or misfortune.

Question 4:

People that insure their insurable properties are more advantageous than those who do

not in terms of losses

Table 4

OPTION NO OF RESPONDENT PERCENTAGES

44
 Strongly Agree 40 80%

Agree 10 20%

Disagree - -

Strongly disagree - -

TOTAL 50 100%

Source: Field work

Comment: The percentage obtained from the result of Table 4 revealed that 80 percent

of the total populations as against 20 percent strongly agree that people who insured

their insurable properties have more advantage than those who do not in terms of

losses. This indicates that people who insure their insurable properties are more at ease

than those who do not in term of losses because of the protection insurance provide.

Moreover, insurance helps, people to maintain their previous position before calamities.

Insurance also contributes to the national economy.

Question 5: Do you believe that without risk there will be no insurance?

Table 5

OPTION NO OF RESPONDENT PERCENTAGE

Strongly Agree 50 100%

Agree - -

Disagree - -

Strongly disagree - -

TOTAL 50 100%

Source: Fieldwork

45
Comment: From the above table, it is quite obvious that all the 50 respondents strongly

agree that without risk there will no insurance, meaning that the existence of risk gave

birth to insurance i.e. insurance is a risk transfer mechanism.

Question 6: Did insurance businesses have some principles and doctrines

upon which they operate?

Table 6

OPTION NO. OF RESPONDENT PERCENTAGE

Yes 50 100%

No - -

I do not know - -

50 100%
TOTAL

Source: Fieldwork

Comment: All the respondents unanimously agree that insurance businesses operate

with some principles that have been upheld by the court over time and some codified in

status. These are the principles and doctrines upon which insurance is based. The

principles are insurable interest, utmost good faith, indemnity, subrogation,

contribution and proximate cause.

Question 7: Not all risk presented for Insurance can be covered?

Table 7

OPTION NO OF RESPONDENT PERCENTAGE

Strongly agree 14 28%

Agree 36 72%

46
 Disagree - -

Strongly Disagree - -

TOTAL 50 100%

Source:Fieldwork

Comment: Fourteen out of 50 staff, representing 28% strongly agree that not all risks

could be covered. While 36 respondents out of 50, representing 72% agree that not all

risk presented for insurance can be covered, which is true. For a risk to be insurable, the

following general conditions must be met. The risk must be pure, it can be capable of

financial measurement, person insuring must have insurable interest, the premium

must be reasonable, the damages must be inherent in nature and lastly there must be

adequate knowledge to enable insurers quote terms and conditions.

Question 8: Kindly give at least two examples of each pure and fundamental risk. Most

of the respondents that were able to respond to these questions give example of pure

risks as

1. Earth quake

2. Explosion

3. Destruction

4. Damage

5. Or theft of a car

While fundamental risks include:

a. War

47
 b. Inflation

c. Etc

Question 9: Briefly, differentiate between risks and chance.

Respondents defined risk as uncertainty of loss, which may likely happen, or a

probability of an event happening and can be insured against. While chance is the likely

opportunity of something occurring or the probability of loss or occurrence or positive

expectation of event and cannot be insured.

Question 10: Briefly state the role insurance plays in the growth and growth of the

Nigerian society and economy.

Respondents cited the following roles:

a. Availability of funds (life) for investment.

b. Provision of employment.

c. Provision of settlement money for claims.

d. Loss prevention and social security.

e. Providing financial security.

f. Insurance investment and national income.

g. Insurance and social growth.

h. Insurance investment in real estate department.

i. Insurance investment and the balance of payments.

j. Insurance investment and gross National product (GNP)

48
Question 11: Many people outside the periphery of the Insurance Industry have looked

at the institution with disdain and they are simply suspicious of the insurer and their

styles of business. What effort does your corporation do to remove doubt in the mind of

the public?

Respondents outline some effort put in place by the insurance businesses to remove the

doubt in the mind of the customers or the general public at large. Some of the efforts

employed are public awareness campaign through advertisement for example; “A

caged lion” advert. By NICON insurance at 9:00 pm network news break every night,

many pamphlets have been published to create awareness and to show how claims are

openly settled so as to convince people that funds collected from insurance businesses

were rightly used, extensive public awareness campaign through seminars and

customers forums, establishment of branch network, so as to come closer to the people

at a grass root and educate them on what insurance is all about.

Question 12: Kindly suggest ways of improving the function of insurance businesses.

The respondents suggested the following major ways of improving the

function of insurance businesses.

1. Through more inspections and regulations by the relevant Government agencies.

2. Insurance professional bodies should be more strict in supervising the activities of

insurance businesses for example N.I.A. (National Insurance Association).

3. Employing professional and technically sound employees.

4. According to the insurance industry more recognition and relevance should be

49
given by the government as is done for the banking industry.

5. More public enlightment by the insurance companies

6. Better welfare on insurance personnel’s.

7. More government involvement on the activities of insurance industry.

50
 CHAPTER FIVE:

SUMMARY, CONCLUSIONS AND RECOMMENDATIONS

INTRODUCTION:

In this chapter, a Summary is made of all the matters discussed in the previous

chapters. Conclusions and recommendations are also made.

SUMMARY:

This project work is aimed at highlighting the various functions and importance of life

Insurance Businesses to the Nigerian economy. This project work has five chapters, the

first chapter consist of the Nature and origin of Insurance in Nigeria which deals with

the statement of the problem, assumption of the study objective, significance,

hypothesis, scope, limitation and plans of the study.

The second chapter is the literature review, it contained the data collected from

documented materials or published information such as annual reports, magazines,

journals etc. The chapter also contained discussions on impact of Insurance Businesses

on the growth of Nigerian economy and the role of the Nigerian Insurance market.

In the third chapter, which is the research methodology, attempt was made to explain

the design of the research project and the method used in collecting data that were

relevant to the study.

The fourth chapter deals with analysis and interpretation of the data collected. And

finally, in the concluding chapter, we present a summary of the study, conclusions,

recommendations, and suggestions for further studies.

CONCLUSION

51
This study has attempted to highlight the impact of insurance and its major

contributions to the economy. It has revealed the significance of the insurance industry,

in national economic growth. The industry is still quite young, however, the regulatory

body, NAICOM are laying down regulations in an attempt to revitalize the industry.

The insurance industry acts as an absorber of the risks and uncertainties normally

associated with economic activities, it is our conclusion that enactment and

implementation of laws that would enhance the growth of the industry that would

increase its contribution to the gross domestic product. We cannot have a buoyant

economy if it is not insurance backed. Hence, we must support our insurance industry

to enable it play an effective role as the nation’s risk bearing industry, capable of

propelling the national economy to greater heights and further growth. Also, the entire

insurance mechanism and the national economy can only function effectively in a

peaceful and orderly environment under the rule of law.

The future of this industry looks promising if the professionals will remain united,

having the same vision and pursuing the same goals.

The industry has been under serious criticisms on account of its reluctance in the

settlement of claims and alleged unclear terms of insurance, which were often

interpreted against the interest of the clients. These misconceptions have given the

industry bad name, to the extent that members of the public consider it a waste of

resources to insurance any property. According to Late Mrs. Stella Obasanjo, as quoted

in a meeting tagged FIICEN (forum of Insurance Institutions chief executives and

National Insurance Commission) said “There remains this belief that the insurance

52
company will manufacture some excuse not to settle your claim in the event of

accident”. According to her, an efficient and reliable insurance Industry should

constitute a major element in the overall economic growth plan, adding that it remains

one of the ways in which investors could be persuaded on the security of their

investment.

53
RECOMMENDATIONS

The fact that the performance of the insurance industry depends to a large extent on the

social, economic, and political environment in which it operates, the insurance industry

of any nation is to a large extent, a reflection of the level of performance of the nation’s

economy.

In this light therefore, to have a viable insurance-backed economy that is to improve on

the efficiency of insurance industry, we recommend followings:

a. A revolutionary promotion of knowledge and education: the number of

professionals in this field is too limited. In an effort to improve the status of the

industry, there must be a revolutionary promotion of knowledge amongst the

brokers. Insurers, reinsurances, activities and loss adjusters. The industry must

now begin to recruit young graduates for training as future leaders in all sectors

of the industry.

b. Marketing culture: For the industry to develop there is the need to be more

creative and innovative especially in marketing initiatives. Due to lack of

marketing orientation, the level of awareness of insurance business has remained

low in Africa.

c. Agricultural and Health Insurance: The present Government of the country has

to give more emphasis on agriculture and health insurance, because they are the

areas that demand urgent coverage by insurance industry. This is because at this

stage of our growth it is obvious that our survival as a nation depends on our

54
 ability to feed ourselves. Therefore, the funds accumulated by the Nigerian

Agricultural Insurance Company should also be used to assist the small-scale

farmers, so that they will use the fund to purchase fertilizer and other tools and

farming equipment. Further more, the problem of health care and medication has

become so costly, that there is a yearning need for health insurance scheme in

Nigeria. Nigeria is highly populated, the benefit of large number will make the

health insurance viable.

d. Government policies and programmes should be geared towards

the promotion of insurance awareness by making it mandatory by

certain class of insurance in the interest of the public. For example,

the employer’s liability to their employees for death or injuries at

work, fire insurance for all installation in office buildings, factories

etc, would have the advantage of promoting awareness and

availability of funds thereby increasing the investment power.

e. Insurance company could also further invest in the construction of

housing estates in urban and rural areas that could be rented out to

members of the public at a reasonable amount. Also the

educational sector needs the insurance businesses to provide

special funds for under privileged children, orphans and also for

technical training in order to learn a trade.

Finally, certain control should be incorporated into the operation of the insurance

businesses in order to check against misuse of funds, which is supposed to be used in

55
indemnifying people concerned, such control are to make sure that the operations are

carried out and the staff are efficient. The areas of control include:

a. Structural control

b. Procedural control

c. Custodian control

d. Efficiency control

All these are along institutional line and often referred to as check and balances.

Hopefully, if these few suggestion is adopted effectively, the insurance industry will

have a remarkable impact on the economic planning of the nation.

56
REFERENCES

Anderson, D. J. (1983): Commerce for West Africa.

Macmillan Publishers Ltd. Ibadan-Nigeria.

Babalola, A. (1987): The Role of Accountability and

Profitability in Insurance. McGraw Hill

Book London, United Kingdom.

Dale, E. (1978): The Principle of Insurance. Prentice Hall

of India Private Ltd. India.

Denenber, H. S. (1974): Risk and Insurance.

Prentice-Hall. Inc.New Jersey.

U.S.A.

Ejiofor, P. M. (1975): The Role of Insurance Industry In the

Economic Growth. Heinemann Educational

Books Ltd. Ibadan-Nigeria.

Franks, J. R. (1985): The Insurance Law and Decree.

Dryden Press, London, United Kingdom.

57
Insurance Digest (2001): “Nigerian Insurance Year-

book”(An In-House Magazine of Insurance

Businesses). Published by Nigerian Insurance

Association.

Irukwu, J. O. (1968): Insurance Management In Africa.

Mac million Publishers Ltd. Ibadan-Nigeria.

Kenau, D. (1988): Accidents and Motor Insurance. Pitman

Publishers.New York-United States Of America.

Ogunlana, F. O. (1973): Growth of High Level Manpower

for The Insurance Industry In Africa. Heinemann

Educational Books Ltd. Ibadan-Nigeria.

Osuala, E. C. (1982): Introduction to Research

Methodology. African-Fep Publishers Ltd.

Onisha-Nigeria.

NICON at 30(1969-99): “The Historic Strides”. (NICON

Insurance Corporation). Lagos Nigeria. Quantum

58
 Publishers Ltd.

Ndagi(1984): Essentials of Research Methodology for

Nigerian Educators.

Ibadan-Nigeria. University Press Ltd.

59
Trenery, C. F. (1969): Origin of Early History

and Insurance. Heinemann Educational

Books Ltd. Ibadan Nigeria.

Williams, A. C. and Heins R. M. (1971): Risk

Management and Insurance, Mc Graw

Hill Inc; U.S.A.

Withrrby, K. C. (1970): Motor Insurance Theory

and Practice. Columbus chares Ememol

Publications. New York-U.S.A.

Yerokun, O. (1975): General Principles of some

aspect Insurance Law in

Nigeria. ASCON Publication. Lagos-Nigeria.

60
QUESTIONNAIRE
PLEASE TICK IN THE RIGHT BOXES AND WRITE WHERE NEEDED.

Gender

Male [ ] Female [ ]

Years of service

0-5 [ ]

6- 10 [ ]

11– 15 [ ]

Over 15 Years [ ]

Section B

1. Trade cannot achieve its desired goals in a nation without the aid of

insurance businesses

Strongly Agreed [ ] Agreed [ ] Strongly Disagreed [ ] Disagreed [ ]

2. People that insure their insurable properties are more advantageous than

those who do not in terms of losses

Strongly Agreed [ ] Agreed [ ] Strongly Disagreed [ ] Disagreed [ ]

3. Do you think that without risk there will be no insurance?

Strongly Agreed [ ] Agreed [ ] Strongly Disagreed [ ] Disagreed [ ]

4. Does insurance businesses have some principles and doctrines upon which

they operate?

Yes

No

I do not know

5. Not all risk presented for Insurance can be covered

Strongly Agreed [ ] Agreed [ ] Strongly61Disagreed [ ] Disagreed [ ]

….…………………………………………………………………………….

….……………………………………………………………………………..

….………………………………………………………………………………..

….…………………………………………………………………………………

7. Briefly, differentiate between risks and chance.

….………………………………………………………………………………….

8. Briefly state the role insurance plays in the growth and growth of the

Nigerian society and economy.

….…………………………………………………………………………………

9. What effort does your corporation do to remove doubt in the mind of the

public?

….………………………………………………………………………………..

10. Kindly suggest ways of improving the function of insurance businesses.

….………………………………………………………………………………..

….………………………………………………………………………………..

62