Background of the Study
Life is full of risk and every human being is confronted with a possibility that one day, this hazard which form part of life may befall them. The purpose of insurance is to indemnify the victims for the financial loss they might have suffered as a result of these risks. Insurance as an industry did not exist in Nigeria until the later part of the twentieth century. However, there existed in Nigerian communities some form of organized mutual social insurance schemes which had the future of modern insurance. Apart from the early social insurance scheme, insurance as an industry is relatively new in Nigeria. The management of an insurance company like any other business outfit there must be profitable while being able to pay claim in return for payment of a fee by the insured called premium.
The insurance company under takes numerous activities in their operation usually assessing the extent to which risks presented to them are different from normal and if so, to what extent is the additional hazard capable of being mitigated and at what rating consideration.
A process known as premium rating system is used to decide what price the insurer should charge (George 2008: 106). The premium price should reflect the claims list and expenses associated with the contract but also include an allowance for the insurer’s profits margin. This allowance depends on the level of competition in the relevant insurance market.
1.2 Statement of the Problem
Due to the negative fact surrounding the insurance industry
in Nigeria, the activities of the industry have been subjected to various criticism we can therefore elucidate problems of this study based on the observation and critical analysis of the industry non-payment of claims as at when due by the industry have become a factor that negates the performance of the industry and the issues of inadequate capital for investment to put the company in a more favourable condition to meet their demand of their clients. Often business organizations in the country that rely on the insurance companies realize they are in a case where their incurred losses which have been insured are not indemnified therefore, this research work aims at highlighting the importance of insurance industry to the development of business enterprise in Nigeria.
Objective of the Study
The primary objectives of this research work are:
To examine the roles played by insurance companies toward the development of business enterprise.
To investigate the challenges facing insurance company in Nigeria.
To suggest possible ways of improving the performance of insurance firms.
1.4 Research Questions
The following questions are formulated to guide the study.
What are the roles played by insurance companies toward the development of business enterprises?
What are the challenges facing insurance company in Nigeria?
What are the possible ways of improving the performance of insurance firms?
1.5 Significant of the Study
It is expected that at the end of the study managers and staff of insurance companies shall be assisted on how to carry out their business activities. The work shall also help insurance companies expand their business and reveal the strength and weaknesses of the business of insurance. Finally, the work serve as a reference material and guide to students, lecturers and researchers who may embark on similar study.
Scope of the Study
The researcher will focus and concentrate on the role played by insurance companies towards the development of business enterprises in Nigeria using Anchor insurance as the case study.
Limitation of the Study
There are so many constraints that hindered the researcher but the major were finances access to materials, and time that was limitation of material for the secondary data in spite of the fact that there are many existing text books and journals of insurance which would have been used for this research work. But getting them in the library was not easy as many students were equally writing on similar topics which require the same materials.
Organization of the Study
The work is organized into five chapters, chapter one Introduces the work, statement of the problem, objective, research question significant, scope, limitation, organization of the work and definition of terms. Chapter two presents the review of related literature, chapter three shows the research methodology chapter four focus on the data collection and how it is been presented, why chapter five talks about the summary of the finding and conclusion.
Definition of Terms
The following definition are considered within the context of this research:
Insurance: This is a contract, represented by a policy, in which an individual or entity receives financial protection or reimbursement against losses from an insurance company.
Insurance Company: Is business organizations that provide coverage inform of compensation resulting from loss, damages, injury or in exchange for premium payment.
Premium: Is the price of insurance protection for a specified risk for a specified period of time.
Development: It is the change growth and the process of creating something so that it can become more advanced and stronger in valve.
Indemnity: Restoration to the victims of a loss by payment, repair or replacement.
Business Enterprise: Is a venture vested with the activity of providing goods and services.
Management: Is the process of organizing and coordinating the activities of a business in order to achieve set goals.
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