IMPACT OF INSURANCE COMPANIES IN THE DEVELOPMENT OF AN ECONOMY
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IMPACT OF INSURANCE COMPANIES IN THE DEVELOPMENT OF AN ECONOMY
ABSTRACT OF THE IMPACT OF INSURANCE COMPANIES ON ECONOMIC DEVELOPMENT
The research work undertaken in the project topic title “The Impact of Insurance Companies in Economic Development of an Economy” has achieved the study’s objectives, which are as follows:
To determine the influence of insurance businesses on the growth and stability of the nation’s economy, as well as areas where the insurance industry has failed in its lofty objectives, and to make recommendations for adjustments for improved industry services.
It investigated the impact of insurance services on Nigeria’s emerging economy. And also the contributions of insurance services to the buyer of insurance products or its benefits to the purchase of these products such as life assurance product,
car insurance, fire insurance, marine insurance, and accretion. Insurance contributes significantly to GDP through its financing of investment in Nigerian firms.
The project was written utilising both primary and secondary sources. The key component was a questionnaire that was produced and delivered to the insurance public. During the research, oral interviews and firsthand observation (Field Surveys) were also used.
Secondary data was gathered through an examination of relevant books, journals, and newspapers.
The questionnaire responses were analysed using random sample techniques and frequency tables.
Based on the analysis, a conclusion was reached, and recombination was offered.
Finally, at the conclusion of the investigation, I was able to activate the goal of learning about the impact of insurance companies on economic development.
PROPOSAL ON THE IMPACT OF INSURANCE COMPANIES ON ECONOMIC DEVELOPMENT
Insurance is a complicated subject that involves persons who are willing and capable of receiving the service.
The goals of this research are to determine the impact that insurance companies have had and will have in the future on the growth and stability of the nation’s economy,
as well as areas where the insurance industry has failed in its noble goal and to make recommendations for better industry services.
It will also investigate the influence of insurance services on Nigeria’s emerging economy. The research will also look into the contributions of insurance services to insurance product buyers or the benefits of purchasing these products such as life assurance, car insurance, fire insurance, marine insurance, and accration.
Insurance contributes significantly to GDP through its financing of investment in Nigerian firms.
Primary and secondary sources will be used in the research. The primary data will be created closed-ended surveys that will be delivered to the insurance public.
Oral interviews and personal observations will also be used. (Field Research).
While secondary data will be based on a review of relevant books, journals, and news articles. The questionnaire responses will be analysed using random sample techniques and frequency tables.
CHAPTER ONE: THE IMPACT OF INSURANCE COMPANIES ON ECONOMIC DEVELOPMENT
INTRODUCTION (1.0)
The topic of this project is “The Impact of Insurance Companies on Economic Development.”
(A Case Study of Nicon Insurance Plc in Enugu). My objective is to investigate the following:
(a) Insurance’s brief history or historical aspect
(b) Insurance Definition
(d) The Functions
(A) HISTORICAL PERSPECTIVE ON INSURANCE
Early British merchants who founded trading posts on Africa’s West Coast introduced modern commercial insurance to Nigeria in the first four decades of the twentieth century.
Until the Royal Exchange Assurance Company Limited opened an office in Lagos in 1921. Insurance was previously conducted through Skeletal agency arrangements.
However, it has now spread to numerous Nigerian companies.
(B) DEFINITION OF INSURANCE
Insurance can be characterised as a social science that is primarily concerned with risk, and risk taking implies the possibility of loss (OKWOR, 1985). As a result, an insurance company is a service company on which other businesses rely for security and protection.
(C) INSURANCE FUNCTIONALITIES
Many writers have highlighted some of the insurance functions that the researcher will not hesitate to discuss after listening to all of these functions.
i. Insurance assures individuals that their individual financial losses will be properly and evenly spread across the covered Community or group as a whole.
ii. By providing financial security to businesses and enterprises, as well as money to finance the replacement of loss and damage.
iii. The insurance industry serves as an effective channel for the mobilisation of natural resources for national development endeavours.
iv. The insurance industry is a major employer of labour, providing joint opportunities for the country’s teeming population and aiding in the resolution of unemployment issues.
As a result, with regard to the economy, which is in a condition of depression, insurance functions might be linked as a tool for investigating this depression because the industry is also in line with the country’s financial operations.
Insurance companies provide financial support to other actors in the economy. They accomplish this by ensuring the financial survival of other businesses in the event of uninsurable risks.
Without the financial compensation provided by the insurance industry, many businesses would have gone out of business, resulting in economic waste.
The economic development of any country is intimately tied to the behaviour of its citizens in terms of how much they save and how much they spend from their earned money.
Savings equals investment in terms of national accounting. It is also true that a country whose residents consistently make an attempt to save a portion of their discretionary personal income will be economically sustainable, ignoring uncontrolled circumstances such as political instability and depression.
Savings are valuable to the extent that they are wisely and prudently invested in various economic growth initiatives, thereby adding to the gross domestic product, which determines a country’s level of life.
As a result, the government encourages citizens to save through government-approved institutions such as insurance firms. There are benefits to developing in individuals a sense of thrift by saving money through easy monthly installments and pooling the otherwise inevitable individual contributions that create a regular source of investment loan in the economy.
1.1 STATEMENT OF THE PROBLEM
Despite its huge contributions to Nigeria’s economic progress, the insurance company is widely misunderstood.
A thorough investigation into the origins of the problem in the insurance company will demonstrate that the problem can be traced back to three institutions: the insurance industry, the media, and the general public.
It is appropriate to begin by evaluating how the insurance company contributed to the problem. Essentially, the most significant negative influence on insurance firms in Nigeria is the public’s literacy level and insurers’ incapacity to connect with them. Only a fraction of Nigeria’s over 180 registered corporations have officers or sections dedicated to public relations.
The typical person has yet to completely understand the concepts and practise of insurance, while the so-called elite in society are unaware of how insurance companies operate.
How has the media contributed to the misinterpretation of insurance companies?
In this country, there are approximately 86 daily and weeklies, as well as 38 magazines, although none are insured. A closer look reveals that the majority of the reports published by the sampled publications were routine and uniformed in that they lacked depth.
Industry by fear mongering. Members of the public have disseminated so much general cynicism and distrust about the industry that everything concerning insurance in this country now appears to be dull and untrustworthy.
They have preconceived notions about insurance since they are unclear about the principles and practise of insurance. They have grown so ingrained that a Nigerian, even if unaware of the primary benefits of insurance,
would prefer not to discuss it, let alone purchase it. There is the scourge of claim settlement delays, which has stained the insurance business in its own way.
1.2 OBJECTIVE OF STUDY
Despite all of the negative consequences associated with its continuous presence, insurance has indeed helped to Nigeria’s economic success.
The study’s objectives are as follows.
– It is well known that insurance companies play an important part in the Nigerian economy; this paper aims to determine how much contribution they make. What contributions has the industry made, and in what areas?
– This analysis will also determine the impact of insurance businesses’ contributions on the Nigerian economy.
– To provide recommendations based on findings.
1.3 SIGNIFICANCE OF THE STUDY
This study would be extremely beneficial to the Nigerian people since it will add to their understanding of the concepts and practise of insurance, as well as the need for it. It will also assist to erase the mountain of insurance bias that has already accumulated in the public’s minds.
This research paper emphasises a major issue affecting the operation of the insurance business in Nigeria and goes on to discuss the issue and how it can be resolved.
The insurance firm would be able to come up with and thus know the probable areas of development with the help of these identified problems in order to deliver a long-term solution to the problem of the industry’s bad image in the eyes of the public.
The time of this research work is very opportune, especially as the decade comes to a close and Nigeria and other countries across the world anticipate that there will be everything for everyone, including insurance.
As a result, the importance of this study at this moment is unquestionable.
1.4 THEORETICAL STATEMENT
In order to move on with this research, the following hypothesis was developed:
1. Whether the public’s level of insurance literacy influences their desire and demand for insurance products and services.
2. Whether insurance companies have played a significant part in Nigeria’s economic development.
3. Is the degree of insurance acceptance in Nigeria low?
4. Whether insurance professionals are performing well in the Nigerian economy.
1.5 SCOPE OF THE STUDY
The scope of this study effort includes the function of insurance companies in Nigeria’s economic development.
Nicon Insurance Plc Enugu is utilised as a case study for this work’s theme, which is a very intriguing area of study.
The researcher found numerous issues that hampered the development of the task. Some of the issues are as follows:
i. A lack of suitable materials dealing with current findings. This caused numerous issues because the researcher requires the most latest materials to work with.
ii. Because most insurance companies are not publicly traded, they are unwilling to make their animal reports available to strangers.
iii. At times, it was only God’s grace and miracle-working power that allowed this study work to be discovered.
1.6 DEFINITIONS OF TERMS:
1. The legal right to insure is known as an insurance interest.
2. Insurance Reinsurance This can be any type of insurance.
considered as insurance business of the type t which such business would have belong if it had been under written by the reinsurer.
3. Insurance Brokers A professional insurance practitioner who works independently to connect individuals and businesses in need of insurance with insurers best suited to meet those individuals or businesses’ insurance needs.
4. Moral Hazard This is the right of a person who has indemnified someone under a legal obligation to stand in the place of the other person and exercise all of the rights and remedies accessible to the other person, whether or not they have previously been enforced.
5. Preferences This is the monetary consideration paid by the insured to the insurer in exchange for their promise to pay the sum insured if the risk insured against occurs.
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