The Growth And Contribution Of Life Assurance Business In Nigeria
This research work, the researcher examined the growth and contribution of life assurance business in Nigeria. 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 Enugu 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.
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.
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.
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;
- Sub-standard policies designed by the underwriter’s could not meet the current change in the society towards satisfying individuals needs.
- High rate of poverty that result to on interest or concern by the individuals has affected the development of life assurance policies Nigeria.
- The low demand for life assurance policies has to greater extent affected the marketing of life assurance business.
- 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 growth and contributions of life assurance business in Nigeria. The specific objectives of this research work include the following;
- To examine the effects of sub-standard policies on the development of Life assurance business in Nigeria.
- To find out the extent at which high level of poverty in the country affects the patronage of life assurance business.
- To examine the effect of low demand for life assurance policies marketing of life assurance business
- 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:
- What is the importance of insurance in national building
- How does insurance help in improving the standard of living in Nigeria
- What is insurance and assurance, and state the classes of insurance
- How does insurance business facilities economic growth
1.5 The Scope of the Study
There have been several forces which militate against the collection of data for this work. Though the researchers have to do the best of their knowledge and abilities to collect the data and also verified it to be true. However as earlier mentioned certain conditions hampered the data collecting exercise high on the list is finance. The researcher was not adequately equipped with finance for the project to be carried out successfully. Financial strength that would have been a means for easy movement, for the purpose of scouting for data was absent.
Time, is also another factor that hindered the researcher from making further research work. The time given for the project was so tight, therefore, most research work were done half way.
End of course examination was also another obstacle. The researchers could not carry out the work anymore since their examination is almost approaching the situation compelled them to quickly round up the work the way it was not supposed. However, the researchers to the best of their ability strove to make up a better shape of the work. The negative attitudes of the respondents towards supplying information was another scope, the most respondent did not feel secured enough to bear out their minds for the researchers.
Scope by sample it is only one insurance company in the country that was selected for study. The insurance company under 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.
1.6 Operation Definition of Terms
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.
A statement that something will certainly be true or will certainly happen particularly when there has been doubt about it, e.g. death.
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.
These means restoring someone to his or her formal position
A person or company that provide with the insurance contract.
Is the amount of money that is paid to the insurance company
An acceptable of the proposal binding the insurance company to issue a policy to the insured.
Giving a temporary protection for the insured the document usually lasts for thirty day.
It’s a reason seeking insurance cover.
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.
This phrase means that the insured must have an interest in the subject matter of the policy taken.
This means that, there must be close connection between the risks insured against the cause of the loss.
1.7 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.
Summary, Conclusions and Recommendations
In this chapter, a Summary is made of all the matters discussed in the previous chapters. Conclusions and recommendations are also made.
This project work is aimed at highlighting the various functions and importance of 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 thestudy.
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 Insurancemarket.
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.
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 insuranceindustrytoenableitplayaneffectiveroleasthenation’srisk 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 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 theirinvestment.
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 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 theindustry.
- 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 inAfrica.
- 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 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.
- 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.
- 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 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:
- Structural control
- Procedural control
- Custodian control
- 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.
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