INSURANCE BUSINESS AND ITS IMPACT ON THE GROWTH OF THE NIGERIAN ECONOMY

CHAPTER ONE

INTRODUCTION

THE LEADING ASSURANCE COMPANY (NIG) LTD

Leading assurance did not progress with 1970. The lead way company was incorporated in 1970 to make out full assurance business in Nigeria. The company registration office is in Kaduna.

The Head Quarter of lead way assurance is located at Kaduna town in Kaduna State. They have branches, which are refers to as ‘collecting centres’. These collecting centres are situated in almost every state of the federation.

Some of them are found in the following towns, Abuja, Akure (Ondo State), Bauchi (Bauchi state), Ibadan (Oyo state), Port Harcourt (River state) Sokoto (Sokoto state), Zaria (Kaduna state), Warri, Yola (Adamawa state), Gboko (Benue state), Jos (Plateau state), Kano (Kano state), Ikeja (Lagos state), Makurdi (Benue state) and Maiduguri (Borno state).

In these companies the following forms of the insurance business are: fire policies, motor vehicle business policies, accident policies, workmen compensation and life assurance policies.

BACKGROUND OF STUDY

Before the 19th century, there was nothing existing like Insurance business, nevertheless there were some association or communities who were organized in the form of material, social insurance schemes which had the common feature of today’s modern insurance. Among such were the age grade associations, extended family system and the cultural unions. These unions and associations maintained funds collected periodically from members out of which financial assistance were extended to decease members of the family who has experience some calamity.

In Nigeria, even up till today, this system of social insurance still exists as part of cultural life or many communities. In addition, we have the emergence of social club of Nigeria the kook kats club of Nigeria among many others which provide some form of social insurance schemes to their members as well as use part of the accumulated premiums for national development and charity donations.

The modern insurance business was first introduced in Nigerian 1921 by the Royal exchange assurance company Ltd and it remained the only insurance company in Nigeria. Until 1949 when three other British owned insurance companies were also established. Before 1921 however, some form of insurance business operated in Nigeria, mainly in marine (for export produce) sector, and a few in the motor insurance sector. One can understand the reason for this because by 1920 records showed that there were about 300 cars and a total of 17 miles of tarred roads in Nigeria, so the chance of knocked down a motor vehicle were very slight.

By the time Nigeria got her Independence in 1960, the number of Insurance companies operating in Nigeria had risen to 25. They were all mainly foreign-owned. However, by 1984, there were 88 insurance companies operating in Nigeria most of which are now indigenous companies. In addition to that there were no registered insurance brokers.

Available statistical information that the insurance market in Nigeria has grown rapidly since 1960, not only in numerical strength but also in assets. By 1983, the insurance business in Nigeria attracted a gross premium income of N634 million.

The first insurance act was promulgated in Nigeria in 1961 by the federal government known as “the insurance companies Act 1961”. The act introduces for the first the necessity for the registration or licensing of the insurance companies. At the same time there came the marine insurance Act 1961, which still governs the operation in Nigeria.

There were subsequent registration, the most prominent being the Nigeria insurance Decree 1976, which was promulgated to regulate the insurance business the way previous legislation did not do.

The federal ministry of finance and the office of the director of insurance altogether control insurance companies in Nigeria and the insurance business. The insurance department of this ministry is responsible for controlling the activities of insurance companies so as to ensure compliance with the provision of Nigeria insurance Decree 1996 and other relevant regulation to the business of insurance in Nigeria.

Some of the major insurance companies operating in Nigeria are under the National Corporation of Nigeria, which was established by Decree No. 22 of 1969 to transact the business of insurance in Nigeria.

STATEMENT OF THE PROBLEMS

Insurance business in Nigeria specifically offers a number of protections to many risks to which the economy is exposed. Insurance companies perform a good number of functions in the Economic development of the country. Prominent among them is:

Safe-guarding the immeasurable risks to which capital is exposed and

Reducing the burden of loses for the entrepreneur or investors.

In as much insurance business facilities safer economic development many mere people are yet to recognize the relevance of this sector of trade.