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CONTRIBUTIONS OF INSURANCE IN THE MANAGEMENT OF RISK IN NIGERIA OIL INDUSTRIES

ABSTRACT

The title of this project is “The Insurance Contribution in the Risk Management in the Nigerian Oil Industry.” There are five chapters in this work. The first chapter covers the study’s background, a statement of the problems that led to the research, the study’s objectives, the research questions, the scope of the research questions, the scope of the research question, the scope of the research question, the scope of the research question, the scope of the research question, the scope and limitations of the study, the significance of the study, and the definition of operational terms. The second chapter contains a review of related literature, the history of insurance, the reasons for insurance business in Nigeria, different types of drilling operations, different types of risk in the oil industry, and so on.

CHAPTER ONE

INTRODUCTION

BACKGROUND OF THE STUDY

Agriculture was the mainstay of Nigeria’s economy prior to independence and for a short time afterward. This is due to the fact that many of its residents are farmers. About 70% of the Nigerian population was farmers at the time, demonstrating that Nigerians are poor. Agriculture, particularly the sale of cash corps, was her only source of foreign exchange at the time.

Nigeria’s economy evolved as a result of the oil boom in the early 1970s, just after independence and the civil war. This resulted in a complete disregard for the country’s agricultural sector and other mineral resources. The boom attracted international investors in a variety of areas, including banking, insurance, and oil production. The company was one of the first to develop the oil field.

One should consider how to limit the risk involved in both offshore and onshore operations. Insurance coverage is an appropriate means of dealing with and mitigating the risks that oil firms face. Most of the risks that the petroleum sector anticipates can now be covered by insurance firms.

Property, equipment, and machinery are all covered by insurance in the event of a loss or destruction. In addition, insurance essentially settles claims on fires, thefts, oil spills, etc., as well as temporary disability and medical expenses for employees, as well as damage to their parties’ property, and makes good any court decision arising out of their general negligence of any kind.

The most important role of insurance is to indemnify the oil sector in the event of a loss.

STATEMENT OF PROBLEM

The following are some of the primary issues that sparked this research:

The government’s regulation and surveillance of the oil and gas industry’s business activities is inadequate.

The petroleum industry’s failure to recognize the insurance industry’s potential contribution to effective and efficient risk management

Lack of awareness of the oil and gas industry’s high risk exposure, particularly in the offshore sector.

OBJECTIVES OF THE STUDY

The following are some of the study’s goals:

Examine the insurance industry’s potential contribution to risk reduction and loss prevention/reduction in the oil and gas business.

 

To assess the challenges that the Nigerian insurance industry faces in managing risk exposure in the oil and gas sector.

 

The purpose of this study is to assess the performance of the Nigerian insurance industry in the oil and gas sector.

 

To evaluate the associated risk in the oil sector in order to evaluate the oil for possible insurance coverage.

RESEARCH QUESTIONS

Is there an issue or a hurdle that the insurance business has in managing risk in the oil and gas sector?

Is the insurance cover given by the Nigerian insurance market adequate to support the oil and gas sector’s economic activities?

Is there any benefit to the oil and gas business from the insurance industry?

Is insurance a tool for risk mitigation and loss control in the oil and gas industry?

Is the Nigerian insurance industry up to the task of insuring oil and gas risks?

SIGNIFICANCE OF THE STUDY

The following topics will be covered in the research:

Oil and gas industry: The study will be extremely useful to the oil business since it examines the numerous products that are required and the role of insurance in the oil and gas industry.

The research will be beneficial for academic purposes and will act as a data basis for students conducting future research on the subject.

Insurance business: The study will be beneficial to the insurance industry in that it will assist them in improving the service they provide to the oil and gas industry and the economy as a whole.

The research also generates cash for the Nigerian economy.

SCOPE OF THE STUDY

The scope of this study is limited to a few selected oil firms in Porthacourt, such as the Nigerian National Petroleum Corporation (NNPC), Oil Shell Company, and Mobile Petroleum Company. As a result, the data acquired will be utilized to make inferences for oil corporations and other insurance companies in Nigeria.

LIMITATION OF THE STUDY

The following are some of the variables that limited the scope of this investigation.

Time: The time allotted for this research was insufficient, as other academic activities had practically reduced the time allotted for investigation and data collection.

The uncooperative attitude of some respondents, who perceive this research work as a threat to their work and position, posed a limitation to this research project. The research work was also limited by a lack of research materials as a result of insufficient research materials. Due to a lack of funding, the author is unable to travel to locations where research materials can be found.

DEFINITION OF TERMS

A demand for payment under an insurance by the insured is known as a claim settlement. When an insurer pays the insured a specific sum based on the occurrence of insured events, this is known as claim settlement.

Drilling: Drilling is the process of making a product with the help of a drill.

Insurer: An insurer is a person who agrees to indemnify the insured in the case of the insured event, subject to payment of the insurance premium and compliance with the policy terms and conditions. An insurer is also a person who sells insurance products.

Insured: This is a party who is entitled to receive insurance benefits in the event that the insured risk occurs.

Liability insurance is a type of insurance in which the insurer is held liable as a result of a specific event.

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