Marketing Of Life Assurance Policies In Nigeria (A Study Of Leadway Assurance Plc Enugu)

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Marketing Of Life Assurance Policies In Nigeria (A Study Of Leadway Assurance Plc Enugu)


Abstract


In Nigeria the issue of taking life assurance policy has been neglected in the sense that at this presence time, it is estimated that not up to two percent (2%) of Nigerians own life assurance policies due to poor education and inappropriate marketing strategies for this fact, the benefits and role life assurance plays in this country is being viewed from a very crooked point thereby making it slightly visible.This study therefore focuses on marketing of life assurance policies in Nigeria. The population of the study comprises both staff and customers of Leadway Assurance Plc Enugu.

A sample size of fifty (50) was selected made up of 20 staff and 30 customers. Both primary and secondary data were collected. Questionnaire coupled with personal interviews were the main research instrument. The data was analyzed by the use of chi-square statistical method.The study came out that insurance companies in Enugu state (Leadway Assurance) exercise their marketing functions and strategy mainly through advertising and sales promotions as a guide to customer profit motive and competitive tool. It was recommended that insurance companies should endeavor to establish a monthly publication. Such publication will serve as strong public relations machineries in promoting the image of insurance industry.


Chapter One


Introduction

1.1 Background of the Study

In Nigeria, the issue of taking life assurance policy has been neglected, in the sense that at this presence time, it is estimated that not up to two percent (2%) of Nigerians own life assurance policies. For this fact, the benefits and roles life assurance plays in this country is being viewed from a very crooked point thereby making it slightly visible.

Moreover, the life assurance industry has entered on era of accelerated change as a result of increased competition in the products and pricing within all the insurance sectors. Hence professional marketing management is now a prerequisite, if a company is to return or advance its position in the competitive hierarchy they must follow suit.

However, before choosing the kind of cover to take, the intending assured should first of all sit down and analyzed his need. Life assurance has been said to be for those who live too long and those who die too soon. The needs of people in both these categories can be met. Most salary earners and wage earners have other people depending on them, it could be parents, a wife, children or even brothers and sister. In life assurance programs, funds are accumulated through payments made by the assured person called premium so that, should death occur, prior to a specified date or upon survival at an agreed period funds would be made available from the scheme to pay whatever benefits that are due.

The idea of assistance and association is not new to the Nigerian society. Various town and clan unions and social dubs, have various ways of showing benevolence to their bereaved members as discussed earlier. It is customary for people to pay condolence visit and present a sympathy purse. These practices are similar to mutual life assurance.

However, life assurance as practiced today is part of the nation’s colonial heritage. Obviously, the British introduced life assurance into Nigeria, hence the practice closely follows, the British pattern. The earliest colonial insurance interest in Nigeria was directed to the general insurance of goods and cargo.

Few life businesses which tricked in were referred to British Home Officers in London for processing. Only the affluent could afford it then because it was considered as enormous risk to insure person living in the tropics and the cost of providing such life cover was very expensive and uneconomical.

With independent in 1960, life assurance started to change. Lead way Assurance Company was incorporated between Nigerians and expatriates. It therefore became the life specialist’s underwriter. Within the same period, the Nigerian life and pension consultants together with the Nigeria universities management consultant indicated the development of group life and pensions scheme in Nigeria. Before 1960, many Nigerians shunned the idea of effecting life assurance cover. They felt generally that the insurance agents were wishing them bad-luck, premature death and therefore would never have anything to do with the insurance and their agents.


1.2 Statement of the Problem

  1. Lack of statistics which result to problem in payment of benefits.
  2. Inability by insurance marketer to design policies which will meet the current change in the society.
  3. The effect of insurance image in Nigeria due to tribalism, religions strife etc.
  4. The low demand for life assurance policy which could be attributed to lack or poor education and inappropriate marketing strategies.

All have contributed to the problem which tends to impede development of life assurance in the Nigeria society.


1.3 Objective of the Study

Having been exposed to the problems, we have to look into what the researcher intend to achieve which is as follows;

  1. To provide a new statistical method that will enhance payment of benefit
  2. To identify those policies that suits the current demand in the society
  3. To promote insurance image and enhance inhabitance co-existence in the society
  4. To provide a strategic method in marketing life assurance polices and promotes public awareness.

1.4 Research Questions

  1. Are there any method used in valuing payment of benefit?
  2. Does the organization carry out marketing research to know the current trends of an event in the society?
  3. Does socio-cultural beliefs of the society affect the operation of life assurance policy?
  4. Does lack of public awareness hinder the activities of life assurance?

1.5 Research Hypothesis

Ho; Insurance companies have no strategic method in marketing life assurance policy.

H1; Insurance companies have strategic method in marketing life assurance policy.


1.6 Significance of Study

The study of the problems facing marketing of life assurance companies is significant in many ways, especially to the insurers, the life assurance intermediary and the insuring public.

Hence at the end of this study, the insurers and the life assurance intermediaries will be able to identify the problem militating against the effective marketing of life policy in the society. The study is also meant to highlight the need for adequate sales promotion methods, advertising principles and understanding of the life assurance policy.

Finally, it points out the need for marketers in the life assurance industry to appreciate the concepts, strategies and application of marketing as a spring board for growth and also the need for them to work with the actuaries of the life policies to specific target markets.


1.7 Scope and Limitation of the Study

The scope of the study covers marketing of life assurance policies in Nigeria. But in the cause of the study, there were some factors which limited the scope of the study which were beyond the control of the researcher;

a) Availability of Research Material:

The research material available to the researcher is insufficient, thereby limiting the study

b) Time:

The time frame allocated to the study does not enhance wider coverage as the researcher has to combine other academic activities and examinations with the study.

C) Finance:

Finance is one of the limitations to study. The researcher is facing financial constraint to meet the all the needed educational requirements including this research study.


1.7 Operational Definition of Terms

Insurance

Insurance is a means of protection from financial loss. It is a form of risk management, primarily used to hedge against the risk of a contingent or uncertain loss

Insurance Policy

Insurance policy is a contract (generally a standard form contract) between the insurer and the insured, known as the policyholder, which determines the claims which the insurer is legally required to pay

Life Assurance

Life insurance is a contract between an insurance policy holder and an insurer or assurer, where the insurer promises to pay a designated beneficiary a sum of money (the benefit) in exchange for a premium, upon the death of an insured person

Life Assurance Policy

Life assurance policy is a contract between aninsurance policy holder and an insurer or assurer, where the insurer promises to pay a designated beneficiary a sum of money (the benefit) in exchange for a premium, upon the death of an insured person.


1.8 Organization of the Study

This research work is organized in five chapters, for easy understanding, as follows

  1. Chapter one is concern with the introduction, which consist of the (overview, of the study), statement of problem, objectives of the study, research hypotheses, significance of the study, scope and limitation of the study, definition of terms and historical background of the study.
  2. Chapter two highlights the theoretical framework on which the study is based, thus the review of related literature.
  3. Chapter three deals on the research design and methodology adopted in the study.
  4. Chapter four concentrate on the data collection and analysis and presentation of finding.
  5. Chapter five gives summary, conclusion, and recommendations made of the study

Chapter Five


Summary, Conclusion and Recommendation

5.1 Introduction

It is important to ascertain that the objective of this study was to ascertain the marketability of life assurance policy in Nigeria.

In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in addressing the challenges of marketing life assurance policy in Nigeria.


5.2 Summary

The primary purpose of life insurance is to provide financial stability to families in the event the breadwinner dies. In addition, owning life insurance has many other benefits in terms of cash value, tax and estate planning. However, with these benefits, the life insurance business would have grown to an enviable level in the financial sector of the Nigeria economy but for numerous challenges. From the above, it can reasonably be concluded from the analysis that several factors exert considerable effect of varying degrees on the life insurance business in Nigeria. Specifically, income, low level of insurance culture, apathy, customer satisfaction, Information Technology alignment, growth and cost efficiency, and transparency and disclosure—all constitute challenges to insurance business in Nigeria. In, income represents an important part of the challenges to tackle with a great deal of efforts. Based on the analysis and conclusion made, the paper recommends that since income represent the greatest challenge, efforts should be shown toward making life insurance products affordable by insurance companies, this they can do by adopting a pricing strategy that will minimize executive excesses to enable the company make profit even when the product are sold at premium price. On the part of government, more jobs should be created to put more food on the table of the people while the implementation of the new minimum wage for workers should commence without further delay to enable workers patronize life insurance product.


5.3 Conclusion

Life assurance is a very important business which seems to have been misconstrued by the insuring public due to inflation and attitude of Nigerians. This lack of interest in investing in Life Assurance has retarded the development and the growth of Life Assurance business in Nigerian market. The policy rarely takes advantage of the none forfeiture provisions in the policy conditions which have resulted in high lapse rates and low persistence. Furthermore, there is with this is the prejudice about life insurance and the poor training of the field underwriters who are the backbone of insurance marketing. In terms of investment, insurance industry seems to have no place in Nigeria. The unpredicted nature of our economic situation makes it look fraudulent on the eyes of the generality of the country. However, if the life assurance policies should be designed on the short-term basis, more people will be interested as revealed from the questionnaire administered. Insurance companies therefore need to invest more in public enlightenment and manpower development so as to give life assurance business its pride of place in the economy


5.4 Recommendations

Haven completed the study; it is recommended that significant marketing communication activities be targeted more at this set of people. This will help to kindle their interest in the business and brings the life insurance institution to the highly exalted position it belongs in their perception.The problem of apathy arises as a result of fraud perpetrated by agents. To tackle this challenge, life insurance firms should develop a measure that would help in checking the excesses of the agents and their practices. Customer satisfaction could be engendered through ethical and sincere practices like prompt and less bureaucratic claim payment. For Information Technology alignment, although, the renewal of a business-critical IT application system represents a challenge itself, it also represents an important part of the solution to cope with the other challenges. However, easy-to-integrate IT applications based on a modern architecture remain necessary. There should be transparency in the operations of the insurer and full disclosure of material fact on the part of the insured. With all of these in place, growth and efficiency in the life insurance would have been achieved.


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