INSURANCE COMPANIES AND THEIR IMPACT ON ECONOMIC DEVELOPMENT OF NIGERIA
Business produce goods and services to satisfy the demand of customers. Much as these businesses declare profit year-in-year-out, they also face element of risk and uncertainties that may causes losses. This includes fire, theft, damage by artificial or natural agents and so forth. The business men in the olden days engage into economic activities with pessimism and fear of incurring losses. This inhibits large scale production which is capital intensive. However, with the advent of the insurance business, things improved for the between, as business men become encouraged to commit more of their resources in production activities, knowing fully well that the insurer will reimburse item in the event of damage or loss. Simply put, insurance is a contract of utmost good faith in which the insurer will pay compensation to a policy holder for loss or damage of insured items. Meanwhile, the practice of insurance has become a lucrative business in itself, such that it contributes enormously to the national development in items of employment opportunity provision as well as Gross Domestic Product (GDP)Thus, the interest of the research is aroused to carry out a study in this important, yet neglected sector of the economy with a view of sensitizing the students, business men and the entire public of the benefits derivable from the insurance business. The public policy makers shall be intimated as to the areas that require further regulations and or deregulations.6The researcher therefore employed and secondary sources of data collection in order to do justice to the topic. Chi-square technique of data analysis was used to fully digest the sourced information. This technique is quantitative and its choice was informed by its ability to give a pictorial view of the research findings numerically. Similarly, NICON insurance company was the focus as a case study. The most important among the research findings include the lack of awareness on insurance issues by the teaming Nigerian populations, minimal coverage of the industry’s activities in such important sector as health and agriculture, lack of adequate government as well as private sector participation in insurance business, death of professionally qualified staff operating with the industry to boost the confidence of patronizers; vague and intricate operational mechanism and of course public suspicion about the sincerity of purpose with which the insurance business is dispended, the researcher, hence, proffered such remedial recommendations as infusion of deep sense of professionalism by practitioners in the industry with a view to fostering public confidence, inclusion of insurance training in schools curriculum right from secondary to post-secondary institutions as mandatory especially for science students, sponsored programmes on point and electronic media outfits on insurance matters, increased government participation and deregulation of stringent rules barring the engagement of private sector into insurance business and up-front settlement of genuine claims as they fall due.
1.1 BACKGROUND TO THE STUDY
The developments in our society have made living complex and risky to life and properties. This has become so great that the traditional methods of assisting those affected by misfortunes in our societies are no longer adequate. Therefore, societies call for a more reliable and adequate means by which risk or any misfortunes can be covered in the future, and here lies the importance of insurance which safeguard against risks or losses incurred by clients. Majority of the people in our society today are either ignorant or have a misconception of what insurance entails, what role it plays or its usefulness in the promotion of trade and commerce. As a service industry insurance plays a very important role in the economic and social development of a nation. In appreciation of this, the government has continued to take steps to regulate the activities of the insurance business in order to create a sound and efficient insurance market. Insurance business is one of the subjects that have been securing the public in this country. Many people outside the periphery of the business have looked at the institution with disdain and they are simply suspicious of11the insurer and their styles of business. They claimed that insurer is only interested in collecting premium and hardly settle claims, whenever they arise.
1.2 STATEMENT OF THE PROBLEM
The insurance industry is one of the misrepresented or misunderstood businesses in the world. This is mainly due to lack of knowledge on the part of the public concerning their activities. The degree of knowledge varies from century to century and is relative to the state of socio-economy development in each individual country concerned, which may in turn be governed by the level of the literacy component of each community. In a developing economy, problems associated with the misconception of the impact of insurance are not as pronounced as in under developed countries, including Nigeria. All attempts in developing a sound insurance industry have been confronted by market distortions, high rate of inflation, various governmental regulations, unethical practices and fraudulent tendencies of the insuring public there are overwhelming. There are a few behaviors, which indicate that the Nigerian public, literate or otherwise, know little or nothing about the operation of the insurance business.12Consequently, many questions have been asked. Should insurance companies/brokers continue to exploit the general public as a result of their ignorance about the industry? Is there any need to control the business at all? What are the control measures? These are the questions, which shall be address myself within the essay together with same brief suggestions and methods by which the loopholes discovered could be corrected. Therefore, this research work aims at highlighting the various function or importance of insurance industry to individuals and whole society of Nigeria.
1.3 OBJECTIVE OF THE STUDY
On a cursory look at the insurance mechanism, it would be seen that insurance is a service rendering business. There are special social characteristics of insurance that set it apart from tangible goods industries. Being mostly a contract of indemnity and more so that insurance is a commodity, which people pay for in advance and whose benefits are reaped in the future. Furthermore, the objective of the study is to throw more light on the activities of the insurance with the view to arousing the awareness of the policy holders and prospective ones. This will be achieved by highlighting the insurance mechanism, discovering the weak areas that need to be strengthened and recommendations will be proffered for further study. Also, the study is to highlight the fundamental principles of insurance, which the society has not been able to recognize. This work is made in such way as to highlight the need for insurance in our society. Taking all these into consideration, the following are the objectives of this study: The main objective of this study is to outline the functions, roles and contribution of insurance companies to the development of the national economy. To identify if insurance companies are useful to our day-to-day activities. To ascertain if insurance companies actually perform their financial roles diligently. To suggest ways of improving the functions of the insurance companies.