CHAPTER
ONE
INTRODUCTION
1.0 BACKGROUND OF THE STUDY
Insurance is a security device used by the inured
to protect himself against a risk purchased from the insure and the right to be
indemnified if the risk should materialize. The purchase price which the
insured pays the insurer is known as the premium, often paid on monthly or annually basis and the insurer in
return compensate the insured in event of loss.
THE
DEVELOPMENT OF INSURANCWE INDUSTRY IN Nigeria begins in 1950 during the colonial era period
characterized by a market dominated by Europeans company which virtually held
the monopoly of insurance business over the continent of Africa. At that time
most Nigerians citizens are not aware of insurance and it importance. After
Nigeria independence in 1960 most of the industries managed by the Europeans are
been taken over by Nigerians. As they begin to managed those companies, the
awareness of insurance and it importance was known.
In the 1980, insurance companies operating in
Nigeria begins to grow in numbers and the need to enlighten the citizens on insurance
was carried out by some of the employee of those companies. Who went to the
street to educate they people on the danger of risk that might occur in many
ways, such as fire, theft, accident, rain storms etc. and the responsibility of
the insurance is to compensate the unfortunate person who has suffered losses
by placing him in the same position as he was before. However, some people
agreed to take up an insurance policy but the number of those that patronize
the company at that time was very few.
In Nigeria today, most industries and commercial
business have insurance cover. This is because insurance ensure the growth and
development of all industries and business established and spread all over the
country. Apart from business most people don’t insure their houses, cars farms
etc. they show reluctant attitude towards taking up insurance policy for such
assets and also think it’s a waste of money. Giving great consideration to the
above statement, the researcher is compelled to carry out a research on the
topic in question an assessment of adequate risk recognition and management in
Nigeria insurance companies. In order to re-oriented the people toward changing
their attitude and belief about insurance industries.
1.1 STATEMENT
OF THE PROBLEM
The insurance industry over the years has been
going through a lot of problems, which hinders their effectiveness and
efficient rendering of services. These include.
- Lack of survey of risk transferred by the
insurance companies, as such risk are just assumed without properly
scrutinizing the situations and circumstance surrounding such risk.
- Lack of adequate claims settlement procedures
which are characterized with bureaucracy.
- Lack of proper fixed and computed premiums which
endangers the solvency and profitability of the insurance companies.
OBJECTIVES OF THE STUDY
The following are the objectives of this study?
- To assess hoe insurance companies render their
services.
- To determine the effectiveness of how they handle
the risk that is being transferred to them.
- To encourage insurance companies to have financial
strength that will contain the risk of losses that they have agreed to assure.
1.2 FORMULATION
OF HYPOTHESIS
Null hypothesis (Ho( insurance is not a security
device used by the insured to protect himself against a risk.
Alternative Hypothesis (H1) insurance is a
security device used by the insured to protect himself against a risk.
1.3 SCOPE OF
THE STUDY
The scope of this study will be based on risk
recognition and management in the insurance industry with specific interest on
lead way assurance firm from 2008 to 2010.
1.4 SIGNIFICANCE
OF THE STUDY
1. The research write up will serve as a source of
data for subsequent project and research work.
2. The write up will also help in creating awareness
among the insuring public on the relevance and value of the services offered by
the insurance industry.
3. The research study shall be an immense reference
materials to students and other researchers who might want to expands the
research topic.
1.5 HISTORICAL
BACKGROUND OF THE CASE STUDY
Leadway Assurance company limited was in corporate
in 1970 as a limited liability company. The company started it operation as a
direct motor insurance company and further expanded in the early 80’s to cover
more risk.
The company’s remarkable success has been possible
as a result of its sound professional and business standards backed by the
uncompromising level of integrity of its Directors. Such uncompromising level
of integrity was instilled by it late founder sir (DR) Hassan .O. Odukale as an
honest businessman, the founding managing Director sir Odukale nurtured the
company to an eviable position in the Nigeria insurance industry. Leadway is a
private company with 28 share inventors and trust corporation. The statutory
deposit of leadway with the C.B.N as at 2002 stands at over 13.5 million being
15% of their statutory paid up capital as provided by pre 2003 insurance act.
This further affirms their position as a full fledge composite insurance
company under writing all classes of insurance in Nigeria.
The company, however announced it achievement of
5.5 billion capital base as at April 30, 32006 which implied that the company
has already met the statutory of N5 billion capitalizations for composite
firms. The company authorized share capital has raise from 2 billion to 4
billion in order to meet statutory requirements and accommodate increasing need
for higher capital structure. The increase as given the company the necessary
leeway to keep increase its paid up capital steadily and also enable it to
accommodate new investors.
1.6 DEFINITION
OF TERMS
- Proposal forms: This is a document that is drafted by the insurer
to seek answers to the main materials aspect of the risk that will be insured.
- Premium: This
is an amount that the insured pays at every month ort annually to the insurer
- Proximate Cause: It used to determine whether the loss sustained by
the insurer was cased by the risked insured against.
- Cover: Protection
provided by the insurance company to the insured against a risk.
- Indemnity: This is process whereby the insurance company compensates the insured
in the event of loss.
- Insurer: An insurer is the insurance company who managed risk that was insured.
- Re-Insurance: Is a process whereby the insurance transfer part
of the risk it assumed to another insurance company.
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