THE GROWTH AND CONTRIBUTION OF LIFE ASSURANCE BUSINESS IN NIGERIA

CHAPTER ONE

INTRODUCTION

BACKGROUND OF THE STUDY: The development of life assurance can be traced back to as far back as 1983. It was in this year that we have the first evidence of life assurance known today. A policy was taken on 18th June 1985 on the life of William Gibbons for a sum of 382. The contract was for twelve months and the money was to be paid if Gibbons died within twelve months. He did infact died on 8th may 1984. After a slight dispute over whether twelve months meant twelve calendar months, the money was paid (Nwite, 2007). Olufawo (2005) states that, “today, we have thousand of life assurance policies issues in Nigeria in form of whole life assurance, endowment assurance, term assurance, joint life assurance etc. interestingly, in advanced countries, life assurance business has become the greatest area of investment because it even encourage savings.

Lerhari and Wesis (1974) state that, the advantage for policy owner is “peace of mind”, in knowing that the death of the insured will not result to financial hrardship for loved ones and lenders. It is possible for life assurance policy payouts to be made in order to help supplement retirement benefits.

In Nigeria, pension business was handled for many years by insurers until a group sold the idea of a contributory pension scheme to the government, which former scheme (old state scheme) where pensioners could not get their pension (benefit) after queuing for days led to the collapse of the old pension scheme.

The repeal of the old pension act of 1979 and consequential amendment of the Nigeria social insurance trust fund Act of 1993 brought in the new pension Reform Act 2004. Today, the pension fund has grown tremendously and is in excess of N1. 6 trillion, about 10times the premium of N164.5 billion recorded in the Nigerian insurance sector in 2008 (Fola, 2012).

In the present dispensation, the sector stands the chance to get boots from some of the statutory policies set for enforcement. The workmen’s compensation Decree of 1987 provided cover for permanent or partial disability, accident, sickness and death of worker arising in the course of their employment. Section 9(3) f the Act state that “employers shall maintain life assurance policy in favor of their employees for a minimum of three times annual total enrolment of the employee, under the group life scheme.

According to Aneke (2007) the pension Reform Act for 2004 delegate to the life in insurers, but their share of the fund depends on their ability to win the confidence of its huge population. Nigeria is the biggest life insurance market on the continent. He opined that, it the country’s life assurance business is well positioned it can attain a leadership position on the continent.

Therefore, it is against this background that this research study will investigates the growth and contributions of life assurance business in Nigeria.

1.2 STATEMENT OF PROBLEM

The following problems led to the formation of this research work;

a.   Sub-standard policies designed by the underwriter’s could not meet the current change in the society towards satisfying individuals needs.

b.  High rate of poverty that result to on interest or concern by the individuals has affected the development of life assurance policies Nigeria.

c.   The low demand for life assurance policies has to greater extent affected the marketing of life assurance business.

d.  Studies has shown that high rate of illiteracy is one of the major problems which affects the growth of life assurance business in Nigeria.

1.3   OBJECTIVE OF THE STUDY

In this study, the main objective is to examine the growth and contributions of life assurance business in Nigeria. The specific objectives of this research work include the following;

a. To examine the effects of sub-standard policies on the development of Life assurance business in Nigeria.

b. To find out the extent at which high level of poverty in the country affects the patronage of life assurance business.

c. To examine the effect of low demand for life assurance policies marketing of life assurance business

d. To examine the effect of illiteracy on the growth and development of Life assurance business in Nigeria.

1.4 RESEARCH QUESTIONS

The following research questions will guide the study:

1. What is the importance of insurance in national building?

2. How does insurance help in improving the standard of living in Nigeria?

3. What is insurance and assurance, and state the classes of insurance?

4. How does insurance business facilities economic growth?

1.5      THE SCOPE OF THE STUDY

There have been several forces which militate against the collection of data for this work. Though the researchers have to do the best of their knowledge and abilities to collect the data and also verified it to be true. However as earlier mentioned certain conditions hampered the data collecting exercise high on the list is finance. The researcher was not adequately equipped with finance for the project to be carried out successfully. Financial strength that would have been a means for easy movement, for the purpose of scouting for data was absent.

Time, is also another factor that hindered the researcher from making further research work. The time given for the project was so tight, therefore, most research work were done half way.

End of course examination was also another obstacle. The researchers could not carry out the work anymore since their examination is almost approaching the situation compelled them to quickly round up the work the way it was not supposed. However, the researchers to the best of their ability strove to make up a better shape of the work. The negative attitudes of the respondents towards supplying information was another scope, the most respondent did not feel secured enough to bear out their minds for the researchers.

Scope by sample it is only one insurance company in the country that was selected for study. The insurance company under cted for study. The insurance company under assessment is the lead way insurance scope Nigeria. Therefore, all the findings are written the scope of the company. May be what would be obtainable in the company will not be found in other insurance companies in Nigeria.

1.6      OPERATION DEFINITION OF TERMS

Insurance: this is an arrangement with a company in which you pay them regular amounts of money and they agree to pay the cost of the damage e.g. fire disaster.

Insurance: A statement that something will certainly be true or will certainly happen particularly when there has been doubt about it, e.g. death.

Policy: A plan of action agreed or chosen by an organization or it also refers to as a legal document which gives details of the insurance contract by clause and it is binding on both parties involved.

Indemnity: These means restoring someone to his or her formal position

Insurer: A person or company that provide with the insurance contract.

Premium: Is the amount of money that is paid to the insurance company

A slip: An acceptable of the proposal binding the insurance company to issue a policy to the insured.

Cover note: giving a temporary protection for the insured the document usually lasts for thirty day.

The proposal: it’s a reason seeking insurance cover.

Subrogation: This refers to the right which the insurance company has to stand in the place of the insured against other parties who have caused the claim has been paid.

Utmost good faith: Means that all the parties involved in the contract most acts faithfully and honestly both the insurer and the insured must disclose all relevant facts for the contract.

Insurance interest: This phrase means that the insured must have an interest in the subject matter of the policy taken.

Proximate cause: This means that, there must be close connection between the risks insured against the cause of the loss.

1.7 Organization of the Study

This study is organized into five chapters. Chapter one of the thesis discusses the overview of the study, problem definition, research question, research objectives, significance of the study. Chapter two presents all the relevant literature review on waste management and its related concepts.  Chapter three addresses the identification of the most suitable research methodology for this research and chapter four presents a data analysis of findings gathered from the field. Finally, chapter five presents the summary of findings, conclusion, and made relevant recommendations.