The main purpose of this research work is to examine the historical background of the Nigerian insurance industry with emphasis on the development of modern insurance industry in Nigeria, the role and performances of the insurance industry as well as the clarification of insurance business in Nigeria and to ascertain whether the growth of insurance industry has been consistent with the social economic development of the country. Examination of the scope and structure of the insurance industry as it may effect the growth and development of the country. The research study is divided into five chapters, thus; chapter one deals with background of the study, statement of the problems, objective of the study, research questions, significance of the study, the scope and limitations of the scope and definition of terms; chapter two deals with literature review as they related to the topic of study. Chapter three discusses research methodology subdivided into seven segments. Chapter four deals with the summary of major findings while chapter five deals with the conclusion and recommendations for efficiency and performances of insurance industry in under developing country.
1.1 BACKGROUND OF THE STUDY
British merchants introduced insurance business in Nigeria. Before then there were some existing traditional systems of risk sharing which is known as primitive terms of natural and social insurance schemes. The age grade associations, claim union were some mutual insurance like schemes for showing benevolence to their members who had suffered some misfortune, such as death, ill-health, fire ravages.
In 19th century the British merchant introduced insurance business in Nigeria. The modern insurance structures developed with a lot of legal implications resulting in expressly and documented legal relationship which turned out to be control of insurance. Falegae J.I. (1991) described insurance as a contract between two parties where one of the parties called the insurer undertakes to indemnity the other party called the insured after payment of consideration called premium. Insurance deals with risk which is a probability that an event will turnout to be unfavorable. More importantly, the contract of insurance are governed by the general principles of contract. But on the other account of their special nature, all contract of insurance are in addition governed by fundamental principles of utmost good faith, subrogation and proximate cause. It was in these fundamental principles that the validity of insurance contract depends.
Firstly, insurance was affected on adhoc bases usually through mutual or friendly help with the only objective of protecting their members against the insured risk. Under these, the terms, conditions and premiums were fixed in such a way that the insurance funds merely paid its way.
1.2 STATEMENT OF THE PROBLEMS
The problems that led to this research work include the following:-
· The image at insurance industry over the years has been shattered as a result of poor claim settlement.
· The role of the insurance industry in Nigeria capital market as a capitalist in the Nigerian economic development still has not been felt much after decades of its operations.
· The level of competition in the insurance industry is still very low.
1.3 OBJECTIVES OF THE STUDY
· To examine the historical background of the Nigerian insurance industry with emphasis on eh development of modern insurance industry in Nigeria.
· To determine whether the role and growth of the insurance industry has been consistent with the socio-economic development of the country.
· To examine the scope and the role of insurance industry as it may affect the growth and development of the country.
· To make recommendations that can be used to enhance and foster the development of the insurance industry in the future and ensuring its greater impact on the national economy in Nigeria.
At a point, the assumption of risk for insurance purposes developed into modern insurance systems run by limited liability insurance companies in Nigeria. The objective of this study is to evaluate the extents to which the insurance industry in Nigeria has grown using the industry growth variables such as structure, volume of business size, claims, settlement, profit and investment of insurance funds.
1.4 RESEARCH QUESTIONS
For the purpose of this study, the following research questions have been formulated.
· Does Nigerian insurance industry measure high in their volume of business?
· Does the role of insurance industry have any impact in the economic development of the country?
· Is insurance contributing equitably to the growth of the economy now?
· Has the growth of insurance industry in Nigeria contributed to the growth of the Nigerian economy?
· Can insurance companies comfortably settle claims now?
1.5 SIGNIFICANCE OF THE STUDY
This research work will be of importance to the following:
Students: The project work will provide a source of reference to current and future students that may carry out further research on the related topic.
The stake holders: The stakeholders will benefits from this work in the sense that if the recommendation made at the end of this research are carried out, every one involve will be happy.
Insurance companies: The analysis will also be valuable in interpreting the insurance performances as well as its roles and growth in the country Nigeria.
Government: It will serve as a means of producing future experience to expose areas in the insurance industry where collective actions are necessary either for the country as a whole or to salvage a particular insurance company.
1.6 SCOPE AND LIMITATION OF THE STUDY
This research work covers on a general basis, the roles, performances and growth of insurance industry in the economic development of the country (Nigeria).
In the cost of preparing this work, the author has met with a lot of constraints, considering the limited time given for the completion of this work and owing to the financial constraints the researcher met difficulties in traveling to various places to obtain data to complement what are handy. Another limitation is the existence of inadequate literature on the subject matter.
Similar to this was the unavailability of current data on the operation of the insurance industry. Consequently the work had to be done with only these available.
Another problem encountered is the poor response from the respondents.
1.7 DEFINITION OF OPERATIONAL TERMS
1. Capacity to Contract: This means that both parties must have capacity or power to contract.
2. Claims: This refers the payment made by the insurance company to the policy holder that has suffered loss.
3. Economic Growth: This means increase overtime in a country’s real output of goods and services.
4. Investment: This means putting the insured in the same financing position he was before the loss.
5. Indemnity: This means putting the insured in the same financial position he was before the loss.
6. Intermediary: This refers to the middlemen that bring people who want to obtain insurance cover to insurers for business.
7. Material Fact: It is an information that may influence the mind of a prudent underwriter in assessing a risk.
8. Peril: The risk insured against.
9. Rating: This is the unit cost of insurance.
10. Risk: The refers to the chances of loss or probabilities of an economic loss.