INSURANCE CONTRIBUTION TO THE GROWTH OF NIGERIA

CHAPTER ONE

INTRODUCTION

1.1  BACKGROUND OF THE STUDY

Before the inception of modern insurance it is practiced today in Nigeria, some for m of traditional insurance was in existence in Nigeria. Osaka (1992:3) explained the above as including social schemes which evolved through the existence of extended family system and social associations such as age grades and other unions.

The practice of insurance in our contemporary society could be traced to 1893 when the bank of British West African (BBWA) the ancestors of First Bank of Nigeria PLC which was founded to acquire the business carried on at Lagos by the African Banking Corporation Limited and Elder Dempter company and since then, the business has grown to its present size of about seventy- nine registered companies, conducting varieties of insurance business in Nigeria. This figure however, was consequently upon the downsizing of the financial sub-sector by the Apex financial institution in Nigeria, the Central Bank of Nigeria and the Federal Ministry of Finance.

It is obvious that there is no free risk society. Human being are exposed to different kinds of risks such as fire, accident, diseases, armed robbers, kidnapping and other criminalities in our everyday life. Insurance product therefore were developed in response to environment changes as they affect certain communities.

For this reason, whilst some classes of insurance product are regarded as new to the Nigerian market, they may infact have long existed in other insurance market. It is necessary to bear these peculiarities in mind when we speak of few insurance product. Insurance practitioners sometimes tends to take it for granted and go about their daily business as if they can exist without effectively responding to the growing need of their customers.

Insurance exist solely as a mechanism to alleviate the financial impact of a mishap affecting an individual, a corporate body and the society as a whole. The industry cannot claim to have the divine right to sell its product at a price solely determined by the industry, without fully taking into account whether the products satisfy the needs of its clientele. Even where it is believed that such right exists, a competitive environment within the insurance market will not always permits that. The industry therefore, has an obligation to research the needs of the society we live in and to develop appropriate product to meet these need at fair price. It can only survive and remain relevant as long as it is responsive to the development of new products to meet the over changing economic and social environment, Carr S. (2007).

Insurance therefore is an arrangement whereby people who are exposed to identical risk situation contribute money into a common fund out of which those who are unfortunate to suffer loss receive compensation or being indemnified there from. The purpose of insurance is to provide for the payment of monetary compensation for losses suffered by the insured party a small sum of money known as a premium to an insurer who promise in return to compensate the insured person who has paid me premium for any loss he may suffer, subject to the general conditions expressed in the policy of insurance; (Carr S. 2007).

1.2 STATEMENT OF THE PROBLEM

1. To what extent does insurance contribute to the growth of Nigeria?
2. Does insurance operation has any positive impact on the lives of the populace?

• Can insurance reduce the severity and frequency of loss occurrence in our daily life and therefore encourage economic growth?

1. Has insurance been able to meet up the ever increasing need of the general public through product modification?
2. Does insurance as an aids to trade contributes to the growth of commerce in this country?

1.3 PURPOSE OF THE STUDY

1. The crux of this study is to examine insurance contribution to the growth of Nigeria.
2. That government should actively participate in the insurance business to enhance rapid economic growth of the nation.
3. It is also aimed at to device practical measures to ensure massive awareness among the timid youth.
4. To unveil the various opportunities available to insurance students in Nigeria.

1.4 RESEARCH QUESTION

This study is aimed at providing answers to the following questions.

• What is insurance?
• To what extent has insurance contribute to the growth of the country?
• Is there any relationship between insurance and economic growth?
• Can insurance meet up the challenges ahead of it?
• Can insurance ensure a free risk surety through its risk management strategies?

1.5 RESEARCH HYPOTHESIS

The research hypothesis that has been formulated for analysis is in the form of null and alternative hypothesis. They are as follows:-

H0: Insurance does not contribute significantly to the growth of Nigeria.  

H1: Insurance contributes significantly to the growth of Nigeria.