This project attempts to focus and examine the impact of insurance industry on the economic development of Nigeria with particular reference to NICON Insurance Industry Corporation. This project had critically examined the economic rational and strategies nature of insurance to the economy of a developing nation like Nigeria, it also aimed at ensuring increased performance in the insurance industry in economic developing. This research work will thus attempt to identify the problems that have crippled the activities of firms in insurance industry as well as making valuable recommendations aimed at solving the problems. For the inputs treatment of this research work, the study is divided into five chapters. Chapter one covers the introductory aspect as this project topic, Chapter two entails the literature reviews of the subject under study. Chapter three explains the methodology adopted for the study. Chapter four is concerned with the presentation and analysis of data; collected in the study and testing of hypothesis. The last chapter is the summary of findings, conclusion as well as recommendations.
Statement of Research problem 3
Statement of research Hypothesis 9
Brief historical of Nicon Insurance Corporation 12
Concept of Insurance Industry 17
Concept of Economy Development 20
Nature of Insurance Industry 23
Types of Insurance Industry 24
Nature of Economic Development 27
Indicator of Economic Development 30
Insurance and Economic Development 33
Problem in using Insurance as a tool for Economic
DATA PRESENTATION AND ANALYSIS
Data presentation and analysis 46
FINDING RECOMMENDATION AND CONCLUSION
Appendix 73
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF STUDY
Insurance companies are financial institution with the fundamental role of protecting firms or businesses and individuals from financial losses and provides invisible fund to the economy.
The services of insurance company is apparently important if a nation is to protect the future of business investment which is bedeviled with risk uncertainties to be less risky and make it protection and provision of scare investment fund to the industry is been played by insurance companies in Nigeria.
The genesis of insurance companies in Nigeria back into time from the immediate family system, the community association, the age grade union and cultural associations. Member of this association renders some kind of insurance coverage to their members in terms of adversity, money is contributed to assist member to build a new house if loss by national disaster, burial for dead member and financial assistance to the family left behind. This is an insurance policy in a local setting in Nigeria.
This practice developed to an organized association with rules and regulation guiding the welfare of members in terrible situation if distressed. This system does not allow for premium, however, the financial obligation was in the form of membership fees and contributions. Nigeria started to feel the emergence of modern insurance business in the middle of the 20th century only as a branch insurance companies with head quarters in Europe and America.
This merger outfit developed rapidly into a large business conglomerate with financial assets comparable only to the banking sector.
The first insurance company to have a full branch office in Nigeria was royal exchange the only company fully established in the country since then, more than sixty more companies have been incorporated in Nigeria. There are about three hundred (300) registered insurance companies in Nigeria today. Among them is Nicon Insurance Corporation. PLC, which obviously is the case study of this research.
1.2 STATEMENT OF RESEARCH PROBLEM
The insurance industry is primarily a risk undertaking business the function of the insurance industry is essentially the same in the whole world. Which has not been effectively and efficiently achieve. Although the author has choose the topic of the impact of insurance industry on the economic development. The problem and questions that militate against the normal function of the insurance industry needs to be highlighted. In an attempt to identifying the problems that have hindered the achievement of these functions, the need to provide solution to the problem cannot be over emphasize.
More devastating is the acute shortage of skilled manpower particularly at the top and middle management cadres the industry and admission of new insurers into the industry, since the national supervisor board (NSB) guideline state that at least one professionally qualified person must lead each department in the company before such a firm can be licensed.
Not excluded his the management and staff relation which has not been cordial as result of some inconsistency in the system among which are delay in payment of staff salaries wages bonus and other allowance and more provision of poor relation and this leads effect such as stir (work to rule) embarked upon by workers.
The investment climate in the country also create problems of managers in the industry due to lack of develop capital market, low yield from investment restrictive laws and regulations constraining the managers choice of investment.
Excessive administration expenses on the same types of investment problem of advert effects of global inflation, non-profitability of insurances business of high claims paid as a result socio-political crises (Example 1998 SAPRIOT).
1.3 OBJECTIVE OF THE STUDY
The objective of the study was to examine the Impact of the insurance industry on the economic development of Nigeria. This was carried out by applying various function of insurance as they effect the economy. The study also determine how insurance has been able to play an important role on the development of the economy. The following formed the objective of this study in the following area.
The research is to find out if industry will influence and increase mobilization of saving particularly through life assurance policies, for productive use and as a source of long term.
To determine if it will improve the development of capital market by providing a channel for the sourcing of funds by both public and private sectors of the economy.
The study will determine the accumulation of foreign exchange for the Nigeria economy and direct equity and loan investment in the industrial enterprises.
It will determine whether the upsurge of insurance companies will lead to the mobilization of fund for the government and the investment pattern of the economy and also type social development of the entire nation.
1.4 SCOPE OF STUDY
Insurance industry in Nigeria is a very important business with so many names and branches all over the country. In research like this, it was difficult to cover up all the branches of insurance companies for that simple reasons, the national insurance corporation of Nigeria NICON plc was used as a representative sample in the insurance industry. In the case, out of the 25 branches of the corporation, the Benin and the head office Abuja would be covered due to time constraints and lack of funds to visit these important states.
The activities include life and non-life assurances of the corporation life assurance are life pension, non-life insurance include. Accident, motor, fire, marine, workmen’s compensation, Aviation and miscellaneous.
1.5 SIGNIFICANCE OF STUDY
The very concept of insurance has often been misunderstood and misrepresented in the society, not because of myopic disposition of the general popular but for the fact that insurance awareness has not been fully implemented into the system of which this research work intended to promote insurance awareness, with the view of identifying areas of immense benefit from the corporation to the insurance community as well as to insurance practitioners and the overall contribution to the development of the Nigeria economy.
In the highlight of the above the researcher tends to investigate into the effect of insurance on the development of the Nigeria economy- it is hope that the finding and recommendation. From this study shall be careful to the following.
The government as the determinate of the economic policies in Nigerian.
The accountants, auditors and professional manager who are expected to use insurance in form of national decision making.
The society who are wholly and practically involved in the use of insurance activities.
Other investors who may want to invest in the insurance industry.
1.6 STATEMENT OF RESEARCH HYPOTHESIS
In this study the following hypothesis will be tested.
Ho: There is no positive relationship between the saving of low-income (Rural) and high income (Urban) earners.
Ho: The insurance industry has no effect on the saying of household.
Hi: The insurance industry has effect on the saving of household.
1.7 LIMITATION OF STUDY
Carrying out this research successfully was not achieved on a platter of gold researcher encountered a harvest of constraints.
Firstly, the research was limited to Edo state and Abuja because of time and financial constraints. The time at the researcher’s disposal was not enough to research respondents outside Edo state and Abuja of course, time is very important in research study and a lot if it is needed to exhaust all the requirement of a particular study. That of finance was equally a very big problem as nothing can be done effectively and efficiently without adequate provision of it in fact a lot of money is required to procure some materials that are necessary of a research study. The result of these problem is that the research is restricted to Edo state and Abuja.
Another limitation is in the interview and questionnaire. It was very difficult to get respondents to answer questions or fill their questionnaires truthfully, because comparative analysis of performance of any center is a very sensitive area of an enterprise. In fact the goodwill of the establishment as well as its public image hang on it. Of course, it would be easier for respondents to tell lies about the performance of their establishment as well as its public image. If this were done, it would be very defective to the reliability of the research.
Also the respondents were not quite corporative. Some claimed that nothing materialistic was going to come out from helping to fill the questionnaires. Some feared the possibility of sack, dismissed and termination if they say the truth about the performance of their establishment.
1.8 BRIEF HISTORY OF NICON PLC
NICON insurance plc was established by the federal government of Nigeria under No 22 of 169 (As amended by cap 263 of 1990) as fully owned by federal government insurance company to break the monopoly of foreign insurance companies then operating in Nigeria.
The promulgation of decree 22 in July 1969 could be said to have signaled the end of the domination of Nigeria insurance companies that operated in the Nigeria market. This also started an era of boom in the Nigeria insurance industry as NICON with full government banking and the attendant financial muscles were able to effectively resist the expatriates owned companies.
The functions and activities of NICON were clearly spelt out by the act establishing it as follow.
Subject to the provision of this decree the corporation has power within and outside Nigeria to carry out any class of insurance business.
Without any prejudice to the generality of subsection (1) of this section, the corporation shall have to do any of the following.
To insure any property of the government of any state in the federation or any statutory incorporations.
To insure any property in which and government mentioned in paragraph (1) of this subsection or any statutory corporation has an interest including property held on trust for each government or corporations.
To accept re-insurance of any part of right undertaken by any other person (being risk such the corporation has power to insure against and retrieve and part of such right)
To act as an insurance agent or insurance brother in relation to the insurance of any property in (1) and (2) or this subjection.
The establishment of NICON was intended to half the outflow of insurance fund from Nigeria so that such could be used to develop the Nigeria economy.
Today, the leadership position of the company in the Nigeria insurance industry is not only recognized but also justifiably respected.
NICON is consulted by government state and federal on insurance matters. At different time the company has used its position of strength to assist in settling up new state owned insurance companies and provide remedy for ailing ones.
The company has also been playing a leadership role in the development of manpower for the Nigeria insurance industry.
1.9 OPERATIONAL DEFINITION OF TERMS
NICON– National Insurance Corporation of Nigeria
Cession- The portion of risk that is transferred by insurance to the re- insurer
Indemnity- The maximum amount payable by insurance to a beneficiary of a loss.
Premium- The calculated cost of a risk changed to the insured by the insurer for providing insurance protection against a specific risk for a specific period of time.
Reserve- The actual or potential liabilities which is allocated and kept in a special account by insurance companies to cover unearned premium, outstanding claims and future losses.
Underwriting- This is the act of doing the work of an under writer in accessing a risk and deciding the premium and other relevant matter.
Underwriting- anyone who is ready to accept the insurance risk.
Surrender value- a monetary worth or value on its surrender by the assured.
REFERENCES
Edderdson D.T- (1981) Commerce for West Africa MacMillan Education London.
Gree T.E – (1990) Glossary of insurance terms, Merit press, States Monica.
Ogala Okaka – (1992) Insurance and the Nigeria Economy.
Ogun Shola – Insurance and Pension Practice In Nigeria 1994.
Okwor E. – The insurance industry and the Nigerian Economy C.B.N Bulletin vol. 9 No 31985.
This material content is developed to serve as a GUIDE for students to conduct academic research
THE IMPACT OF INSURANCE INDUSTRY ON THE ECONOMIC DEVELOPMENT OF NIGERIAN (A CASE STUDY OF NICON INSURANCE CORPORATION)
Project 4Topics Support Team Are Always (24/7) Online To Help You With Your Project
Chat Us on WhatsApp » 09132600555
DO YOU NEED CLARIFICATION? CALL OUR HELP DESK:
09132600555 (Country Code: +234)
YOU CAN REACH OUR SUPPORT TEAM VIA MAIL: [email protected]
09132600555 (Country Code: +234)