INSURANCE COMPANIES’ IMPACT ON THE BUSINESS WORLD
CHAPTER ONE
1.1.1 INTRODUCTION
Insurance in its modern form was first introduced into Nigeria by the British. Long before the British arrived, there was a lot of organized trading going on in Nigeria territory, but there was no organized insurance business, as we know it today. Royal Exchange Assurance was the first insurance company to open a full-service branch office in Nigeria.
It opened its first office in Lagos in 1921 and dominated the country’s insurance business until 1949. As a result, there was widespread recognition of the significance of insurance services to economic growth and business development, particularly in Edo State and Nigeria in general. Insurance companies were operating as registered companies in Nigeria from the end of 1989 to the end of 1998, with the majority being indigenous.
The National Insurance Cooperation of Nigeria (NICON), which is fully owned by the Federal Government of Nigeria, is the leading indigenous insurance company in Nigeria, accounting for approximately 25% of total insurance business in the country.
One of the company’s goals is to encourage commercial houses, cooperatives, and corporations to enter into ventures by insuring them against potential losses. It also encourages the spirit of saving through life assurance, which provides benefits to dependents in the event of the assured’s untimely death. The board is led by a chairman and is comprised of experienced men and businessmen.
As previously stated, the company’s management is entirely Nigerianised (i.e. Nigerians). The chief executive officer is the general manager who reports directly to the board of directors. He oversaw the day-to-day operations of the company and was assisted by experienced and capable senior management personnel in charge of finance, administration, life and pension, and the technical department.
This was attributed to the government’s stringent economic measures and the country’s poor economic situation. According to the Insurance Act of 1976, there are two types of insurance in Nigeria. As a result, there is life assurance and non-life insurance.
A. Life Insurance
i. Life assurance for the rest of your life
Endowment ii.
iii. Education and assurance for children
mortgage insurance
v. Terms and conditions assurance
vi. Business protection for a group
Non-Life Insurance B.
i. Cars
ii. Breaking and entering into a house
iii. The use of fire
iv. CIT
iv. Transit goods
Bonds are a type of financial instrument.
vii. All potential risks/contractors
viii. Trustworthiness
ix. Worker’s compensation claim
1.2 BENIN CITY BACKGROUND STUDY AND BUSINESS IN BENIN CITY
Insurance companies first appeared in Edo State in 1968, when the first branch of UNIC insurance company opened in Benin City. The insurance industry experienced a surge as a result of this awareness. During this period of expansion in the insurance industry, UNIC insurance company limited was founded in Benin City.
One of the primary goals of the UNIC insurance company is to increase investment and raise public awareness of the value of insurance to society as a whole. Of course, these were the formative years for the UNIC insurance company, which incurred net losses of N10,000 and N54, 000, respectively.
This was followed by a period of modest growth and success, during which profit was recorded. However, there was a string of high loss margins between 1989 and 1991. This was attributed to the government’s stringent economic measures and the country’s poor economic situation. UNIC insurance company, on the other hand, provides all types of insurance protection.
Some of the UNIC insurance company’s flaws include a lack of public awareness about the insurance principle, and even among Nigerians who are aware of the benefits of insurance coverage, there is a widespread perception that Nigerian insurance companies are reluctant to settle claims.
1.3 STATEMENT OF THE PROBLEM
When compared to those in developed countries, the Nigeria insurance company has been described as underdeveloped. For quite some time now. Nigeria insurance companies have been subjected to explosive criticism from economists, commercial educators, and insurance professionals, among others, and as a result, many accusations have been leveled against them.
The most common of these criticisms relates to claim settlement. The majority of insurance companies’ customers and non-customers alike have been dissatisfied with claim settlement, as many of them would say. When it comes time for them (the insurer) to pay claims, they will make flimsy excuses.
1.4 OBJECTIVES OF THE STUDY
The primary and primary goals of this research are to critically examine and determine the impact of insurance companies in the business world. The study’s broad objectives can be summarized as follows:
i. The potential impact of insurance company restrictions on the stimulation of business activities among the people of the country.
ii. The extent to which fear of risk has been removed from the minds of investors in the economy.
iii. The determination of economic situation or atmosphere, as a result of the contribution of insurance companies in the business economy.
iv. The potential effects of insurance companies on investment in the country.
v. The extent to which insurance companies accelerate the economic activities of businesses.
vi. Finally, consider how insurance companies may have contributed to the economic development of the business world.
1.5 OBJECTIVE OF THE STUDY
The study’s objective is multifaceted. Its significance cannot be overstated. Insurance companies play an important role in the nation’s economic growth and development. As a result, the researchers’ goals for this study are summarized under the following headings:
1. To assist in clarifying some misconceptions about the operation of insurance companies, such as non-payment of claims by insurers: pool of thieves, etc.
2. To identify and examine the ways in which insurance companies create a sense of thrift in individuals, that is, how insurance practices help create a sense of thrift in individuals by saving through easy monthly installments.
3. To assess a business establishment’s willingness or unwillingness to purchase insurance policies. Why are some companies and individuals willing to take out insurance policies while others are not?
4. To critically examine insurance companies’ contributions to the economic development of business in Benin City, specifically how they contribute to the achievement of basic economic goals.
5. To investigate how insurers pool otherwise uninvestable individual contributions to provide a consistent source of investment loan in the economy. Only a few income earners save a significant portion of their disposable income. This small sum, which cannot be used for any meaningful investment project, can be saved through an insurance policy or contract. This small amount of money is pooled together from many insurance policy holders to form a pool of investment loan.
1.6 THE STUDY’S OBJECTIVE
The study’s scope is limited to the impact of insurance companies in the business world, particularly in Edo State. Furthermore, because Edo State is a large state with local government areas, the researcher limited herself to Benin City, the capital and a true representation of the entire state.
Furthermore, because Benin City has a large number of insurance companies, a sample number of two insurance companies operating in the state capital was chosen as the source of data collection.
1.7 DEFINITIONS OF TERMS
This section is required due to the use of technical terms or words that are either unfamiliar or have more than one meaning. The terms listed below are given a working definition.
Insurance is defined as a contract in which one person, known as the insurer or assurer, agrees to indemnify another person, known as the insured or assured, in exchange for money paid to him, known as the premium, for loss resulting from the occurrence of certain events.
Risk: In general, risk refers to what happens as a result of variation in outcomes or results. Uncertainty, rather than certainty, characterizes risks. Unpredictability, rather than certainty, characterizes risks. All of these are challenges that an individual faces on a daily basis as he seeks a source of income.
Policy: A written statement of the terms and conditions of an agreement between the insured and the insurer taking the actual insurance policy.
The premium is the amount paid by the assured or insured to the insurance company on a monthly, quarterly, or yearly basis in exchange for an undertaking to protect them against a specified uncertain risk.
Whole life assurance is appropriate for those who want to provide for their dependents in the event that they die. Premiums are due for the duration of the assured’s life.
Assurance: This is a variation on whole life assurance, which is the cheapest way to insure oneself because it only provides coverage for a specified number of years and no claims are paid out if you live any longer.
Perils: These are the potential outcomes of a risk. Common examples of perils include fire, accident, theft, earthquakes, windstorms, and a variety of other sources of uncertainty.
The various acts or conditions that increase the livelihood or severity of a loss are referred to as hazards.
Losses: The end result of risk is usually a financial loss, which is undesirable.
Annuities: This is a method of receiving a yearly sum of money.
Fidelity: This is a policy that protects an employer from misappropriation of funds or embezzlement by an employee who has been appointed to a position of trust and may have been in a position to embezzle the company’s money.
Policy Form: After a contract is formed between the proposers and the insurer, it is recorded in a document known as a policy.
Coverage Note: Temporary insurance coverage that allows the insured to benefit from a policy while it is being prepared.
Reinsurer: A company that accepts a portion of the insurance risk underwritten by another insurer with the general public.
1.9 STRUCTURE OF THE STUDY
The study has been divided into five chapters. There is an introductory chapter that provides an overview of the study with the statement, objectives, purpose, scope, and limitations; definitions of terms; and a background study of Benin City.
The second chapter provided a literature review and principles of insurance operation, while the third chapter focused more on methodology. In chapter four, the data results are presented and analyzed. The final chapter provided summary policy recommendations and a conclusion.
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INSURANCE COMPANIES’ IMPACT ON THE BUSINESS WORLD