PROBLEMS AND PROSPECTS OF EXTENDING INSURANCE SERVICES TO THE RURAL AREAS

Abstract

The interest to write in this particular topic “Problems and Prospect of Extending Insurance Services to the rural areas” grow out of the present significant roles of insurance industry in extending service to the rural areas. The researcher discovered that the problems facing the extension of the service to the rural area by the industry is poverty, illiteracy and geographical locations. However, the objectives was to examine whether insurance companies extends service to the rural areas or not and if not, to identify the problems and prospects in providing insurance service to the rural areas. The scope of the study was limited to Oba in Anambra state as yardstick to other rural areas in Nigeria and leadway Assistance Co. Ltd to represent other insurance companies due to lack of time. Therefore, data interpretation gave the following findings that insurance industry should provide services to the rural dwellers that apathy and ignorance for insurance service hinder the extension of service to the rural people. This findings also recommended that all the insurance companies should start extending services to the rural areas and also assist in providing social economic activities

 

TABLE OF CONTENT

Title page

Approval page

Dedication

Acknowledgment

Abstract

Table of content

CHAPETR ONE

1.0   INTRODUCTION 

1.1        Background of the study

1.2        Statement of problem

1.3        Objective of the study

1.4        Research Hypotheses

1.5        Significance of the study

1.6        Scope and limitation of the study

1.7       Definition of terms

1.8       Organization of the study

CHAPETR TWO

2.0   LITERATURE REVIEW

CHAPETR THREE

3.0        Research methodology

3.1    sources of data collection

3.3        Population of the study

3.4        Sampling and sampling distribution

3.5        Validation of research instrument

3.6        Method of data analysis

CHAPTER FOUR

DATA PRESENTATION AND ANALYSIS AND INTERPRETATION

4.1 Introductions

4.2 Data analysis

CHAPTER FIVE

5.1 Introduction

5.2 Summary

5.3 Conclusion

5.4 Recommendation

Appendix

 

 

 

 

 

 

 

 

 

CHAPTER ONE

INTRODUCTION

• Background of the study

In today’s modern society, the need for extending insurance services to the rural areas by the insurance industry is of a great important. The insurance industries which part of financial institution exist for the purpose of indemnifying an insured in the case of any loss occurrence. Furthermore, the insurance industry in Nigeria and has not been accepted by its people as to take its rightful place in the nation’s economy.

The importance of the provision of insurance services has been recognized in modern Nigeria, through the various products offered by insurance firms, which are life assurance policies that is classified into individual life assurance, group life assurance and pension, and health insurance business while general insurance business like fire, marine, motor insurance business etc are offered to the consumers of insurance products who are individuals, social clubs, unions association etc.

However, products offered to these groups/ person(s) are for protection against losses incurred by them and keeping them in business. Similarly, it is a fact that the major problem facing the growth and development of the industry in Nigeria today is ignorance an apathy for insurance services in the country. For this purpose, business concerns which is also very peculiar to the rural dwellers who are not easily accessible due to geographical factors and lack of infrastructural facilities in the rural areas of the country.

Hence, the rural dwellers are mostly engaged in small medium scale activities such as subsistence forming, fishing, palm wine tapping, hunting e.t.c. which they may find difficult to buy insurance protection for their benefits against losses that might arise in the course of their daily activities.

Thus, poverty and high rate of illiteracy which is a real factor limiting against the development and growth of the industry in the rural area. In the essence, the industry should do well to solve the inherent difficulties faced by the rural dwellers in finding ways and means of taking insurance services to them at affordable prices(premium) increase their performance, efficiency and profitability by embarking on awareness campaigns and creating of good wills.  Similarly, new products should be developed to suit their needs so as to attack and stimulate participation from the rural dwellers and to settle claims as at and when due with equity, modesty and quick response without prejudice.

1.2 STATEMENT OF THE PROBLEMS

The following are the statement of the problems:

Rural areas do not know what is insurance; talk of insuring  their risk. Poverty and high rate of illiteracy which is a real factor against the development and growth of the industry in the rural areas, lack of trained personnel lead to the unavailability of trained personnel who would work in local areas where the prospective insured dwells. Lack of adequate infrastructure lead to the absence of transportation and communication, also affect the extension of insurance services to the rural dwellers.

Ignorance and apathy to insurance services also bring about the high level of ignorance even among the so-called educated class and the meaning of insurance which is yet to be comprehended and by extension to the rural dwellers has affected the demand for insurance.

1.3 OBJECTIVES OF THE STUDY

The objective of the study is to evaluate the performance of the Nigerian Insurance Industry in the extension of insurance services to the rural areas. The main objective of this work is to:

1. To find out whether the insurance companies extend services to the rural areas or not.
2. To find out why the insurance industry has not been accepted by the rural dwellers.

• To evaluate the causative factors of these problems and to provide possible solutions.

1. To determine whether geographical factors and lack of infrastructural facilities affect the location of insurance companies in the rural areas.
2. To find out the reason for lack of insurance culture and to offer strategies for developing insurance culture in the rural environments.
3. To make useful recommendations based on the finding and then give possible solution to it.

1.4 RESEARCH QUESTIONS

In the cost of this research, certain research questions were generated to guide the researchers in their findings.

1. Apathy and ignorance for insurance services hinder the provision of insurance services to the rural areas?
2. Special packages at affordable price (premium) would attract participation from rural dwellers?

• Poverty and illiteracy limit factors against the development and growth of the industry in the rural areas?

1. Geographical factors and lack of infrastructural facilities limit the extension of insurance services to the rural areas?
2. Prompt payments of claims encourage the acceptance of insurance services by the rural dwellers?

1.4     RESEARCH OF HYPOTHESIS

The following hypotheses from the frame

 H₀: Apathy and ignorance for insurance services does not hinder the provision of insurance services to the rural areas

H₁: Apathy and ignorance for insurance services hinder the provision of insurance services to the rural areas

H₀: Prompt payments of claims does not encourage the acceptance of insurance services by the rural dwellers

H₂: Prompt payments of claims does encourage the acceptance of insurance services by the rural dwellers

1.5 SIGNIFICANCE OF THE STUDY

It is perceived that at the completion of the study, the findings will be of great importance to the policy holder as the findings will help them ascertain the approach of the insurer towards indemnity payment in the event of loss. The study will also be beneficial to the management of insurance company as the study seeks to examine the ways of expanding their tentacles to the rural communities as this rural sector has been discovered as untapped gold mine for insurance business. The study will also be useful to researcher who intend to embark on a similar topic as the study will contribute to the pool of literature that already exist in the subject matter. Finally the study will be useful to students, researchers, teachers and academia’s as it will contribute to knowledge.

1.6 SCOPE AND LIMITATION OF THE STUDY

The scope of the study covers the problems and prospect of extending insurance services to the rural areas. But in the cause of the study, there were some factors which limited the scope of the study:

1. a) AVAILABILITY OF RESEARCH MATERIAL: The research material available to the researcher is insufficient, thereby limiting the study.
2. 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.
3. c) FINANCE: The finance available for the research work does not allow for wider coverage as resources are very limited as the        researcher has other academic bills to cover.

1.7 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, uncertain loss

Insurance claim

An insurance claim is when you have a loss or sustain damage that is caused by a peril insured by your insurance policy.

Indemnity

Indemnity is a contractual obligation of one party to compensate the loss occurred to the other party due to the act of the indemnitor or any other party

Insurance policy

In insurance, the 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.

Policy holder

A person who holds an insurance policy, especially the person whose life is insure

ORGANIZATION OF THE STUDY

This research work is organized in five chapters, for easy understanding, as follows Chapter one is concern with the introduction, which consist of the (overview, of the study), statement of problem, objectives of the study, research question, significance or the study, research methodology, definition of terms and historical background of the study. Chapter two highlight the theoretical framework on which the study is based, thus the review of related literature. Chapter three deals on the research design and methodology adopted in the study. Chapter four concentrate on the data collection and analysis and presentation of finding.  Chapter five gives summary, conclusion, and recommendations made of the study.

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