Cyanogenic Potential And In Vivo Metabolism Of Yellow Cassava In Wistar Rats
Chapter One
Introduction
1.0 Background To The Study
Life insurance is a contract between an insurance policy holder and an insurer where the insurer promises to pay a designated beneficiary a sum of money (the benefits) upon the death of the insured person. In raw and economics, insurance is a form of risk management primarily used to hedge against the risk of a contingent uncertain loss.
According to Adebisi (2006: 13) insurance is an intricate economic and social device for the handing of risks to life and property. It is social in nature because it represents the co-operation of various individuals for mutual benefits by combining together to reduce the consequences of similar risks. As every new area of risks and since with every passing day, new insurance packages are amounted to take care of more and more areas of risks. Agbaje (2005;23), defined insurance as the business of pooling resources together to pay compensation to the insured or assured (i.e policy holder) on the happening of a specified event in return for a periodic consideration known as premium. However, an insurance contract is usually evidenced by a document called the insurance policy which is usually signed at the foot by the insurer or assurer or his agent.
Gollier (2003:118), argued that insurance involves the transfer of risk from an individual to a group sharing losses an equitable basis by all members of the group. The group known by insurance company. Must increase its hold on the premium and widen its profit margin to cope with the demand of their customers.
In the last decade, most studies on the interaction between the financial sector and economic growth has focused mainly on the banks and the stock market. Recently, growing attention has shifted to the interaction between the non-bank financial intermediacies (NBEFs) such as the insurance companies and economic growth. Non-bank financial intermediaries (NBFIs) such as the Insurance Companies have over the years played a very important role in enhancing the efficient functioning of the financial system. These financial institutions issue and sell direct securities to the surplus units of the economy and subsequently purchase other securities. Which are primary in nature from the ultimate borrowers of those funds. The size of funds held by the insurance industry in Nigeria represents a reasonable percentage of the country’s total invisible funds generated by the capital market. These investments in capital market serves as a shield for insurance against predictable inderwriting losses which are more prominent than profits (Agwegbo et al, 2010). Osok, (1999) argued that the insurance industry is vital to the well being and smooth functioning of a modern economy. In a developing country like Nigeria, it acts as a catalyst of economic growth helping to accelerate the process of qualitative structural transformation. Bowers et al (1997) viewed insurance system as a mechanism for reducing the adverse financial impact of random events that prevent fulfillment of reasonable expectations.
According to Osiptan (2009), Insurance business is vital to the financial market due to it’s role in helping efficiently.
Arena (2006) asserts that there are likely to be different effects on economic growth from life and non-life insurance, given that the two types of insurance protect the household, and corporations from different kinds of risks that affect economic activities in
In view of the potential and actual contribution of insurance funds to the economy, there is need to institute a study on the contribution of life and Health Insurance funds to economic growth and development in Nigeria.
Statement Of The Problem
Life insurance is a contract between an insurance policy holder and an insurer, where the insurer promises to pay a designated beneficiary a sum of money. Lack of funds by or among insurance companies leads to claim avoidance, lack of adequate confidence, lack of infrastructural facilities in the country leads to difficulty in establishing a new branch of insurance thus propose a serious problem to life insurance companies. On that note, questions such as; what are the various forms of problems among insurance companies to economic development of Nigeria? What are the contributions of life and health insurance policies and funds to economic development of Nigeria?
Insurance companies in Nigeria are faced with major problems and challenges which hamper and limit their opportunities in exploiting and exploring into the adventurous insurance world which is still in its infancy as far as the Nigerian terrain is concerned.
The problem of the study lies in the fact that despite government effort and policies formulation to ensure and encourage patronage of insurance, there is still the issue of capital flight to of insurance premiums affected by foreign firms underwriting insurance policies.
In line with Nigerian economic development, this study intends to investigate and evaluate whether or not insurance funds have fundamental contributions and significance with respect to the economic growth and development of Nigeria. National insurance commission (NAICOM) ought to continually search for that allusive optimal level of capacity that would support insurance contributory economic growth and development.
Objectives Of The Study
The objectives of this study are:-
To examine the contributions of life and health insurance funds and policies to economic development of Nigeria.
To find out various forms of problems faced in life and Health Insurance Companies in Nigeria.
To examine the performances of life and Health Insurance Policies in Urban and Rural Areas in Nigeria.
To analyze the relationship between Insurance and employment in relation to economic development.
To highlight the differences between the life and non-life insurance policies.
Research Questions
The following questions were proposed in order to provide answers to the questions raised concerning the contributions of life and Health Insurance to the economic development of Nigeria.
What are the contribution of life insurance policies to the economic development of Nigeria?
What are the various forms of problems faced by life and Health Insurance Companies in Nigeria?
What are the relationships between life and Health Insurance and Economic growth?
Does life and Health Insurance funds have any significant contribution on the economic growth of the Nigerian economy?
What do consumers think about life and health Insurance Policy products?
Research Hypothesis
Ho – Life Insurance Policies have not contributed to economic development of Nigeria.
Hi – Life Insurance Policies have contributed immensely to economic development of Nigeria.
Ho – There is no significant relationship between insurance investment and economic growth of Nigeria.
Hi – There is a significant relationship between insurance investment and economic growth of Nigeria.
Significance Of The Study
The study examines the contribution of life and Health Insurance funds to economic development of Nigeria. This study will be of immense benefit to life and health insurance companies in Nigeria and the Nigerian population as a whole. It will provide life and Health Insurance companies better guidelines on how to make policy decisions that will meet the aims and objectives of the establishment. The study will meet the aims and objectives of the establishment the study will be of great help to life and health insurers as it will help them to know why they should embark on life insurance schemes. Finally, the study will add to the existing literature on issues bothering on life insurance policies and also form very good useful information resource base for future researchers on the same or related topic.
Delimitation Of The Study
This study is strictly concerned with the contributions of life and Health Insurance to the economic development of Nigeria.
Limitations Of The Study
Lack of Finance: One of the problems that confronted the researcher is lack of finance was a big constraint going by the present economic situation in the country. Considerable amount of money is needed to conduct a research of this nature.
Inability to Cover the Scope of this Study: The scope of this study encompasses Nigeria but it has been very difficult to cover all the registered life and Health Insurance companies in Nigeria.
This is because of the time and distance involved.
Lack of access to sufficient information at the required time also limited the researcher to information accessible.
Definition Of Terms
Life Insurance: This is a contract between an insurance policy holder and an insurer, where the insurer promises to pay a designated beneficiary a sum of money or benefit upon the death of the insured person(s).
Insurance: This refers to the system of transferring the responsibility of paying for loss from one party to another. (Nduka (2002:2).
Insured: This is the life policyholder on whose life the insurance is effected. It can also be called or known as Assured. It is the person or organization covered by the policy of insurance.
Insurer: This is a person or company that provides people with insurance.
Premium: This is the amount of money which the policy holder pays to an insurance company for guaranteeing his protection. Nduka (2002). It is a consideration received by the insurers from the insured of which the contract is provided. It is the fund of the insurance company.
Portfolio: This is a group of policies with a common characteristics such as territory of type of coverage, or all policies written by a particular insurer, producer or agency.
Assurance: This is a type of insurance in which money is paid out when somebody dies or after an agreed period of time (Ikechi 1998).
Risk: This is the uncertainty as to the occurrence of an economic loss.
Policy: This is a complete written statement of a contract of insurance. (Luthardt et al (1999:2-14).
Insurance agent: This is a legal representative of the insurance company or companies for which they have contractual agreements to sell insurance. Luthardt et al (1999:4-4).
Insurance Broker: An Insurance broker is an independent owner or firm that sells insurance by representing customers (prospective insured) rather than insurers. Luthardt et al (1999:4-11).
Underwriting: This is the process of consideration of an insurance risk. This includes, assessing the appropriate premium, together with terms and conditions of the cover as well as assessing the risk in the context of the other risks in the portfolio. Ibid (2002:122).
Whole Life Insurance Policy: This is a type of life assurance that will last of the lifetime of the life assured and the sum assured is pay able only at death. The assured will pay premium throughout the duration of his life.
Endowment: These are policies in which the cumulative cash valve of the policy equals the death benefit at a certain age.
Accidental Death: Is a limited life insurance designed to cover the insured should they pass away due to an accident.
Limited Pay: It’s a type of permanent insurance in which all the premium are paid over a specified period after which no additional premiums are due to the policy to force.
Universal Life Coverage: It is a relatively new insurance product intended to combing permanent insurance coverage with greater flexibility in premium payment, along with the potential for great growth of cash flows.