The purpose of this study is the impact of government policies in regulating the activities of insurance companies operating in Nigeria. The State’s role in monitoring, regulating and controlling the activities of insurers and intermediaries is to protect the interests of the insurance public and protect them from exploitation by unreliable insurers. Due to the intangible nature of insurance products, governments want to ensure that those involved in insurance products must be competent individuals who will deliver on their promises and promises when required. Also, because the insurance business is complex, governments need to regulate policyholders. Also, because of the breaches of trust that occur in insurance transistors, governments have found it necessary to regulate the insurance industry to control such breaches. The project attempts to appraise the effectiveness of government policies in regulating the insurance companies in Nigeria. The insurance industry in Nigeria has acute shortage of high level of manpower for most classes of insurance, also many Nigerians suffer financial loss due to lack of knowledge in insurance. Due to this problem, government should introduce programs regarding to insurance to the public as to highlight them on the benefit accrued to insurance due to constant financial loss they encounter as a result of lack of insurance knowledge.


Title page

Approval page




Table of content


1.0 Introduction

1.1 Background of the study

1.2 Statement of the problem

1.3 Purpose of the study

1.4 Significance of the study

1.5 Scope of the study

1.6 Definition of the term


2.0 Literature review

2.1 The origin of the insurance industry

2.2 The development of modern insurance in Nigeria

2.3 The insurance market and intermediaries

2.4 The socio-economic significance of insurance

2.5 Structure and performance of the insurance industry

2.6 Government regulation of the insurance companies

2.7 The impact of structural adjustment programs on insurance companies operation in Nigeria


3.0 Research methodology


3.1 Restatements of research question and hypothesis

3.2 Research design

3.3 Sources of data

3.4 Population of study

3.5 Sample size / Design and procedure

3.6 Data collection instrument / process

3.7 Data presentation and analysis on techniques

3.8 Limitation of the methodology


4.0 Data Presentation and Analysis

4.1 Presentation and analysis of data

4.2 Hypothesis testing

4.3 Analysis of result

Chapter 5


5.1 Summary of results

5.2 Recommendations

5.3 Suggestions for further investigation

5.4 Conclusion




chapter One

1.1 Research background

“Risk is a phenomenon that has existed since the beginning of the world. When the future is unknown, risk always exists” (Lemon 1989:
17). This means that the word implies doubt about the future and that the outcome could be worse than it is now. This man can be seen as a risk manager in his day-to-day operations, doing his best to mitigate, eliminate, avoid, withhold, or share risk when it exists.

However, before the emergence of insurance companies in Nigeria, there were several forms of risk management such as the extended family system, age group associations. A modern form of insurance was introduced to Nigeria by the United Kingdom.

In 1921, the Royal Exchange Assurance Company was established, becoming the first insurance company to open a full branch in Nigeria. In 1949, he sprang up three more companies. 1958 African Insurance Company. By 1965, the number of insurance companies had grown to 70. In 1977, the Nigerian Reinsurance Company was incorporated as a Federal Insurance Company. However, Nigeria was under British colonial rule until political independence and was a developing country until 1960. From 1960 to today, many insurance companies have started operations. Insurance is a modern way of spreading losses or spreading risks easily among a large number of people, allowing the unfortunate few, or those who suffer or suffer ensure that communities do not suffer significant economic losses due to The insured pays premiums to a common pool, from which the unfortunate few who suffer losses are compensated. Secondary functions of insurance companies include:

1. Provide loans for life insurance collateral.

2. Encourage and facilitate commercial entrepreneurs and businessmen

Amounts accumulated by insurance companies are reinvested in government-approved securities. This allows the government to provide a steady stream of investment funds to the government, which the government can use to promote the development and promotion of local industries and benefit the local community.

Insurance means that a person, called the insurer or underwriter, pays money, called the premium, against a loss, called the insured or insured, by another person, called the insured. A contract in which you agree to compensate for the occurrence of a particular event. However, it is known that whenever the future is uncertain, there is always risk, so insurance exists primarily to counter the adverse effects of risk.

The purpose of insurance is to compensate or compensate the victim for economic loss. It should be noted here that insurance does not eliminate losses or prevent disasters. What insurance does is soften the blow purely financially by providing monetary compensation to victims. It used to be, but within the terms of the policy.

Reinsurance is the transfer of insurance business from one insurance company to another insurance company. The original insurance company that receives the policy from the insured or the insured is known as the primary insurer or transferor. Reinsurance arose out of the need to spread the risks underwritten by the original insurer. A reinsurance contract means between the issuing company’s policies. Therefore, in the event of an insurance claim, the insured cannot fulfill the reinsurance contract. However, the effects of reinsurance contracts on ceding companies include:


i Reinsurance reduces the probability of ceding

A company that went bankrupt after taking his disaster risk.

ii Reinsurance stabilizes the cedant’s balance sheet by underwriting the risk of change and the risk of error in addition to the risk of random fluctuations.

iii Reinsurance increases the capital available to cedants by freeing up capital that has been tied up to cover risks.

iv Reinsurance expands a cedant’s underwriting capacity by underwriting risk proportionately and providing a portion of the required reserves.

The insurance industry consists of a large number of companies of various sizes, among which NAICOM has established itself. The government uses this commission to regulate the insurance industry. The government uses this commission to regulate the insurance industry. 1997 Established in 1997 by NAICOM Decree No. 1. Before the establishment of the National Insurance Commission, the regulation and supervision of insurance business was carried out by the Insurance Department of the Ministry of Finance.

The National Insurance Supervisory Board (NISB) was established in 1991 and has taken over insurance supervision from the Director of Insurance. The National Insurance Commission (NAICOM) is the head of the Finance and Administration Commission and the Deputy Director General of Insurance Underwriting.

NAICOM Decree 1 of 1997 stipulates the functions of NAICOM as follows:

1 To ensure effective management, supervision, regulation and control of the insurance business in Nigeria;

2 Set standards for doing insurance business in Nigeria.

3 Approval of charges premiums paid to all insurance departments.

4 Regulating transactions between insurers and reinsurers in Nigeria and outside Nigeria

5 Ensure adequate protection of strategic state-owned assets and other properties. 6 Advice to the Federal Government on All Insurance.

7 Approves the standards, conditions and warranties applicable to all insurance business.

8 To protect policyholders, beneficiaries and third parties of insurance policies.

9 Publications for public sale and distribution, annual reports and statistics on the reinsurance industry.

10. Communicate and advise federal ministries, extra-ministerial departments, public agencies and other government agencies on all insurance-related matters contained in the annual technical agreements signed by Nigeria. 11 Contributions to educational programs of the Chartered Institute of Nigeria and the Insurance Institute of West Africa.

12 To carry out any other activity related to or related to any other function under law.

1.3 Purpose of the survey

The purpose of this study is essential to directly examine the impact of government policies on the insurance industry in Nigeria.

Ø Investigation of factors impeding insurer performance through various government regulatory actions.

Ø Determining the impact of these government policies on insurers and the insurance industry

Ø The insurance industry is her second largest deposit mobilizer in the country, thus promoting savings and playing an important role in the social and economic well-being of the country.

Ø Therefore, it is necessary for economic growth to assess industry performance.

1.4 Importance of research

i Educate people in Nigeria about the benefits of having insurance. ii to guide policy makers in enacting insurance legislation;

iii identify the need for government intervention or other intervention by insurance industry regulators;

1.5 Scope of investigation

i To determine the impact of government policies in regulating the activities of the insurance industry in Nigeria.

ii The study therefore focuses on the insurance industry in Nigeria.

1.6 Definition of terms

i Insurer / Insurer:
This is an insurance or insurance company that issues insurance policies to policyholders. ii Insured Person / Insured:
These are the policyholders of the insurance business.

iii Danger:
This is called the root cause or cause of loss.

iv Premium:
This is a regular payment made by the policyholder to the insurance company and the insured must be covered by the insurance company.

This is a written insurance contract issued to the policyholder.

vi Reinsurance:
This is an insurance company that reinsures risks that are already insured by another insurance company. vii Transfer company:
This is the primary insurance company or the primary insurance company that reinsures the risk to another insurance company.

This is the process by which insurance companies determine the weather based on receipt of insurance applications.


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