THE IMPLICATIONS OF OWNERSHIP STRUCTURE OF INSURANCE COMPANIES ON POLICY HOLDERS PATRONAGE
This study is titled the implications of ownership structure of insurance companies on policy holders patronage. I looked into the problem that often associates with ownership structure of insurance companies in Nigeria like lack of fund for expansion in order to carryout its day to day activities, bad records of some past insurance companies in Nigeria, the background of the company and lack of governments total supervision over the companies. I equally looked into the objectives of the study which include identifying the effect of each ownership structure and its implication on the policyholder and also identifying the possible solution in tackling the effects of policyholder’s patronage to private indigenous companies. Through the literature review, it should be noticed that work has been done on the classification of insurance business in Nigeria, the development of insurance industry, indigenization policy, decrees, basic principles of insurance and their effects on the insurance industry. prospects of adequate management of insurance companies is also highlighted. The research so far done which relates to this work has been carried out without consideration for the understanding of ordinary investors who have no knowledge of the legal aspect of ownership in an insurance industry. I equally looked into the research methodology which includes sources of data collection. The sources include primary sources and oral interview. It further looked at research instrument used and validity of the instrument. I also looked at summary of findings which include findings and discussion of findings. furthermore, I looked at the conclusions, recommendations and suggestion for further studies. This project tends to review the structure of ownership of insurance companies in the country and analyze its implications on policyholder – (customers) patronage, this will centre on the attitude of owners towards maintaining good insurance customer’s relationship, and how the policy holder claims and pays premiums.
1.1 BACKGROUND TO THE STUDY
Insurance plays a vital and important role in the economic development of the society. It pools funds for economic losses of the society from where It can indemnify the policyholders should the claim arise at any time. The wide spread of insurance industry in Nigeria was traditionally based on the mutual solidarity that made up the insurance business structure. This work captioned “the implication of ownership structure of insurance companies on policyholder patronage” is trying to pin point the reaction of policyholders over the ownership of insurance companies throughout the federation. It is basical to know if consumers of insurance product, actually prefer individuals managing insurance companies other than government and what benefit they derive from one particular insurance company over others may be due to its structure, activities, good will, aims and objectives.
The conglomeration of different insurance companies in Nigeria made the citizens who are well vast in insurance business apply to be shareholders in the various companies which they felt have solid asset base. This is because they fear that some insurance companies do not settle claims as at when due or at all. During the era of Llyods where the insurance business started, people never thought of the structure or the ownership of the business, they are only after their goods, business which should be adequately insured and protected. These problems were obstacles to insurance growth and needed drastic solutions to combat them.
1.2 STATEMENT OF THE PROBLEMS
Ownership of insurance companies in the federation are faced with the following problems and prospects amongst which are:
· Lack of fund.
· Bad records of some part insurance companies in Nigeria.
· The background of the company.
1.3 OBJECTIVES OF THE STUDY
(i) Identifying how lack of fund posses as a problem to ownership of insurance companies.
(ii) Ascertaining if bad records of some past insurance companies stand as a problem to ownership structure of insurance in Nigeria.
(iii) Identifying how the background of a company stands as a problem to ownership of insurance companies.
· Ascertaining how lack of government supervision posses as a problem to the ownership structure of insurance companies in Nigeria.
1.4 RESEARCH QUESTIONS
(i) Does lack of fund act as a problem to the ownership structure of insurance companies in Nigeria?
(ii) Does bad record of some past insurance companies stand as a problem to the ownership of insurance companies in Nigeria?
(iii) Does the background of a company stand as a problem to ownership of insurance companies in Nigeria?
(iv) Does lack of government supervision stand as a problem to ownership structure of insurance companies in Nigeria?
1.5 SIGNIFICANCE OF THE STUDY
(a) It enabled the students to be more careful in obeying the ethics of their profession.
(b) It also directed the investors on the possible areas to invest, and enabled those that have already invested to have the edge to understand themselves better.
(c) It enabled the general public to know the importance of insurance products and how best to obtain policy covers.
(d) It directed the insurance company on how to improve the economy of the insurance business.
(e) It gave the government the possible solutions on how to tighten their belt if there is any loophole in their control.
1.6 SCOPE AND LIMITATION OF THE STUDY
SCOPE: In the course of carrying out this research work, I went to some insurance companies like IGI, NICON, and STANDARD ALLIANCE, to make inquiries. I also went to insurances brokers and agents to ask questions pertaining to the study.
LIMITATIONS: This research work is limited in certain areas. I was hindered from going beyond where I reached due to some factors like: limited time, finance, and poor transportation system.
1.7 DEFINITION OF OPERATIONAL TERMS
(i) Claim – This is a demand by the insured for payment under his policy
(ii) Conglomerate – Group of companies that perform the same function
(iii) Insured – These are the potential policy-holder of the company
(iv) Insurance Company – This is the company that sells the service to the insured
(v) Ownership – Individual or people that own a particular company
(vi) Policy-holder – The person who owns the policy and who pays the premium usually the insured
(vii) Product – This is the particular risk that is being insured
(viii) Patronage – The ways individuals patronize insurance companies
(ix) Premium – Little consideration the insured pays to the insurance company in view of the risk insured
(x) Proposer – Intending insured.
Dickson, G.C.A. etal (1982): Introduction to Insurance, Great Britain, Pitman.
Irukwu, J.O. (1977): Insurance management inAfrica, Ibadan, caxon press.
Insurance year book (1996) a pp. 5-9.