The Impact Of Government Policies In Regulating The Activities Of Nigeria Insurance Industry

Project and Seminar Material for Insurance

The Impact Of Government Policies In Regulating The Activities Of Nigeria Insurance Industry


The purpose at this research is concerned on the impact of the government policies in regulating the activities of insurance companies operating in Nigeria. The government responsibility to supervise, regulate and control the activities of insurance companies and intermediaries is to protect the interest of the insuring public and to save them from exploitation by unreliable insurers. Because of the intangible nature of insurance product, the government wants to make sure that those engaged in it must be competent person who will fulfil their promise a d pledges when the need arise.

Also because of the complexity of insurance business it is necessary that the government regulate the policy holders. Also because of violation of trust that occurs in insurance transistors, the government has found it necessary to regulate insurance industries so as to control such violations. The project attempts to appraise the effectiveness of government policies in regulating the insurance companies in Nigeria. The insurance industry in Nigeria has acute shortage of high level of manpower for most classes of insurance, also many Nigerians suffer financial loss due to lack of knowledge in insurance. Due to this problem, government should introduce programs regarding to insurance to the public as to highlight them on the benefit accrued to insurance due to constant financial loss they encounter as a result of lack of insurance knowledge.

Chapter One

1.1 Background Of The Study

“Risk is a phenomenon which has been in existence since the beginning of the world. Risk exists whenever the future is unknown” (Lemon 1989: 17). This means that the word implies some element of doubt about future and the outcome may be worse than what it had been at the moment. This man in his daily operations could be viewed as a risk manager, in that man does his best possible to reduce, eliminate, avoid, retain or share risk where they are present.

Tough there were some forms of risk management before the advent of insurance companies in Nigeria such as the extended family system, age grade association and others. insurance in its modern form was introduced into Nigeria by British.

In 1921, the Royal Exchange Assurance Company was established and it was the first insurance company to open full branch in Nigeria. In 1949, three other companies emerged. In 1958, Africa insurance company. By 1965, the number of insurance companies rose to 70. in 1977, the Nigeria Re-insurance company was established as a federal government owned insurance company. Nigeria was however under the British colonial rule up to 1960 when she gained her political independence and as a developing country. From 1960 to date a lot of insurance companies came into operation. Insurance is a modern method of sharing loss or spreading risk lightly over a great number of people so that the few unfortunate ones o r persons who sustain or suffer loss do not heavy financial loss as a result of their misfortune to the community. the insured pay premium into a common pool outcome of which the unfortunate few who suffer loss are compensated.

The secondary function of insurance companies includes:

  1. Provision of loans for building on the security of a life policy.
  2. Encourage and promote commercial enterprise men and industrialist

The accumulated sum of money by insurer re invested to state approved securities and this helps to provide the state with a steady flow investment funds with which the state can provide development and promotions to the local industries which will be of benefit to the community.

Insurance is a contract whereby a person called the insurer or assurer agrees in consideration of money paid to him or her known as premium by another person called the insured or assured to indemnify him against loss resulting to him on the happening of certain events. However, it was known that risk exist whenever the future is unknown and therefore insurance exist primarily to combat the adverse effect of risk.

The purpose of insurance is to compensate or indemnify the victim for his financial loss. It should be noted here that the insurance neither eliminate the loss nor stops the disaster from happening, what insurance does is to soften the blow in a purely financial sence by offering monetary compensation to the victim whereby placing him in the same financial position after loss as he was before though within the terms of the policy.

Re-insurance is the transfer of insurance business from one insurance company ot another. The original insurer who obtain the insurance contract form the insured or assured is called the direct insurer or the ceding company. Re-insurance arose from the need of the original insurer to spread the risk he has undertaken. Under re-insurance contract is between the ceding company policies. Therefore in the event of a loss, the insured cannot enforce the re-insurance contract.

However, the effect of re-insurance contract on the ceding company includes:

  1. Re- insurance reduces the probability of the ceding
  2. company’s ruin by assuming his catastrophe risk.
  3. Re- insurance stabilizes the ceding company’s balance sheet by taking on apart of his risk of random fluctuation risk of change and risk error.
  4. Re- insurance increases the amount of capital effectively available to the ceding company by freeing equity that was tied up to cover risk.
  5. Re-insurance enlarges the ceding company’s underwriting capacity by accepting a proportional share of risks and by providing part of the necessary reserves.

The insurance section is made up of a large number of companies with varying sizes, among which the NAICOM was established. The government uses this commission to regulate the insurance industry. The government uses this commission to regulate the insurance industry. It was established in 1997 by NAICOM decree N0 1 of 1997. Prior to the establishment of National insurance commission, the insurance business regulation and supervision were done by the insurance department of the ministry of finance.

The national insurance supervisory board (NISB) was established in 1991 to take over the supervision of insurance form the director of insurance. National insurance commission (NAICOM) is the head by the commission finance and administration and deputy director for insurance technical.

NAICOM Decree 1 of 1997 stated the functions of NAICOM as follows:

  1. To ensure eh effective administration, supervision regulation and control of insurance business in Nigeria.
  2. Establishment of standards of the conduct of insurance business in Nigeria.
  3. Approval of rate insurance premium to be paid of all classes of insurance business.
  4. Regulation of transactions between insurers and re- insurance in Nigeria and those outside Nigeria
  5. Ensuring adequate protection of strategic government assets and other properties.
  6. To act as adviser to the federal government on all insurance related matter.
  7. Approve standards, conditions and warranties applicable to all classes of insurance business.
  8. To protect insurance policy holders and beneficiaries and third parties to insurance contract.
  9. To publish for sale and distribution to he public, annual reports and statistics on the re- insurance industry.
  10. To liaise with and advise federal ministries, extra ministerial departments, statutory bodies and other government agencies on all matters relating to insurance contained in annual technical agreements to which Nigeria is signatory.
  11. To contribute to the educational program of the chartered institute of Nigeriaand the West African insurance institute.
  12. To carry out such other activities connected or incidental to its other functions under the decrees.

1.2 Statement Of The Problem

The insurance industry in Nigeria has acute shortage of high level manpower for most classes of insurance and re- insurance business. the Nigeria insurance industry does not enjoy the required public goodwill and reason for this has to do with the damage done to practice of the profession by the get rich entrepreneur who goes about the business of insurance with the little regard to the principle of the profession. As a result of this, the government has come up with so many policies aimed at the study though will save the insurance industry.

The extent to which all those government policies affect insurance companies and provides solution to ensure the survival of these insurance companies is another thing. The research therefore, is indicated to examine the impact of various control measures as promulgated by government to regulate the activities of the insurance industry.

1.3 Purpose Of The Study

The purpose of this research is essential in a direct investigation on the impact of government policies on the insurance industry in Nigeria.

  1. To look into the factors hindering the performance of insurance companies through the various government regulatory policies.
  2. To determine the impact of those government policies on the insurance companies and the insuring public
  3. Since the insurance industry is the second largest deposit mobilization institution in the country, it therefore encourages saving which plays an important role in the social and economic well being of the country.
  4. To evaluate the performance of the industry therefore, is necessary for the growth of the economy.

1.4 Significance Of The Study

  1. To enlighten the Nigerian populace about the benefit that they could drive by taken up insurance cover.
  2. To guide the policy makers when hey are enacting laws concerning insurance.
  3. Ascertain the need or otherwise for government intervention through regulatory body in the insurance industry.

1.5 Scope Of The Study

  1. To determine the impact of government policies in regulating the activities of the Nigerian insurance industry.
  2. The study therefore will concentrate on the Nigeria insurance industry.

1.6 Definition Of The Term

i Insurer / Assurer:

This is the insurance or assurance company that issue out policy to the policy holder.

ii Insured / Assured:

This are policy holders in the insurance business.

iii Peril:

This is known as a prime cause or what gives rise to the loss.

iv Premium:

This is periodic consideration payment by the policy holder to the insurance company which will necessitate compensation by the insurer to the insured.

v Policy:

This is a written contract of insurance which is issued to the policy holder.

vi Re-Insurance:

This is an insurance company re-insuring again a risk that had already been insured to another insurance company.

vii Ceding Company:

This is the direct insurer or the original insurer who is re-insuring the risk to another insurer.

viii Underwriting:

This is a process by which an insurance company determine weather or not on the basis it will accept an application for insurance.

The Impact Of Government Policies In Regulating The Activities Of Nigeria Insurance Industry

Project Material Download

3,000 Naira

The complete material will be sent to you in just 2 steps.

Quick & Simple…

Step One Purchase

Make payment of ₦3,000: through USSD Transfer, Bank Mobile App, ATM Transfer, or POS Transfer to:

Access Bank PlcAccount No.: 0811003731
Name: Samphina Academy
Account Type: Current

Or Click Here to pay with Debit Card

Click Here to pay with Debit Card ($15)
GHANA – Make Payment of 60 GHS to MTN MoMo, 0553978005, Douglas Osabutey 


Step Two Purchase

Send the following details through Text Message or WhatsApp Messenger | +234-8143831497

  • Payment Details 
  • Email Address 
  • The Impact Of Government Policies In Regulating The Activities Of Nigeria Insurance Industry

The complete material will be sent to your email address after receiving your payment information | T & C Apply

  Contact Our Help Desk

You may also like:

⚠️ Need a different topic? Perform a quick search

Get A Complete Business Plan For Any Business In Nigeria

Business Plan for Businesses in Nigeria

  Business Plans in Nigeria

The Impact Of Government Policies In Regulating The Activities Of Nigeria Insurance Industry


This research material “The Impact Of Government Policies In Regulating The Activities Of Nigeria Insurance Industry” is for research purposes and should be used as a guide in developing your research project / seminar work. For no reason should you copy word for word (verbatim) as will not be liable for any who copied the material.

The aim of providing this material is to reduce the stress of moving from one school library to another all in the name of searching for research materials. This service is legal because, all institutions permit their students to read previous projects, books, articles or papers while developing their own works. According to Austin Kleon “All creative work builds on what came before”. is only providing this material “The Impact Of Government Policies In Regulating The Activities Of Nigeria Insurance Industry” as a reference for your research. The paper should be used as a guide or framework for your own paper. The contents of this paper should be able to help you in generating new ideas and thoughts for your own research. Use it as a guidance purpose only.

How to defend your research work

This is a general guide on how to defend your research work:

1. Prepare For Questions:

If you are preparing for questions that may be asked during your defense, then your answers will flow smoothly and effectively. This will prove your knowledge on the subject e.g “The Impact Of Government Policies In Regulating The Activities Of Nigeria Insurance Industry“, and strengthening your argument. Ask friends and family, read your work for them to listen to your presentation, and write down questions. You may be lucky the panel will ask you those you have already prepared on.

2. Strong Summary:

Summarizing your chapters will help keep your audience focused because it is easy for a mind to drift, so providing summaries will ensure your panel will follow along, even if they lose focus for a brief moment. Visual aides, such as graphs and power-point presentations can be very helpful. If you are going to use these, make sure you will practice your presentation with them.

3. Be Confident in Your Research Work:

Not knowing your topic “The Impact Of Government Policies In Regulating The Activities Of Nigeria Insurance Industry” inside out will cause you to struggle and ultimately fail with your defense. You need to know the subject from every angle to ensure you are fully prepared for any question that may come your way.

4. Conclusion:

Reinforce your findings to conclude your defense. The finale of your presentation should focus on proving the work that has been done. You may need to recap on what has changed and remained unchanged, if is necessary.

5 . Listen:

Before you get defensive or recite a particular answer, make sure you truly understand the question being asked. Being a good listener is an important quality, because providing an inaccurate or off-topic answer will also weaken the validity of your paper.

Samphina Academy

Samphina Academy is an Online Educational Resource Center that is aimed at providing students with quality information and materials to aid them in succeeding in their academic pursuit.