The Role of Insurance Companies in Nigerian Economic Development

THE ROLE OF INSURANCE COMPANIES IN NIGERIAN ECONOMIC DEVELOPMENT

Abstract

This project examines the contribution of insurance firms to Nigeria’s economic growth. According to all indications, the insurance sector is crucial to Nigeria’s economic growth and the country’s issue with risk management. It is clear that the majority of people who are unaware of the contributions made by the insurance sector place more trust in banks and other financial institutions, but these people often overlook the fact that the banking sector recognizes the significant contributions made by insurance companies to the growth of the country’s economy.

In Chapter 2’s study of related material, the extended family system, age-grade associations, and the provision of insurance coverage to members, particularly during trying times, were among the most notable topics.

Considering that this project solely uses secondary data, chapter three discusses the research strategy and technique. Chapter 4 contains the research’s conclusions, which show that insurance firms are currently settling more loss claims than in the past.

Chapiter 1

Overview Of The Study’s History

In order for a group to assume the risk of people and economic enterprises, the individual must pay the group a fee known as the premium in exchange for the group taking on the risk. As proof of the risk assumption contract, the group then issues a document known as the insurance policy. To the individual, the sum of the premiums paid by the policy holder to the group creates the fund or pools from which losses of specific group members are covered. The group is referred to as the insurance, whilst the person is known as the insured.

According to all indications, the insurance sector is crucial to Nigeria’s economic growth and the country’s issue with risk management. It is clear that the bulk of the populace places greater trust in the banking and other financial industries than they do in the insurance sector since they are unaware of its contributions. However, these individuals overlook the fact that the banking industry recognizes the enormous contribution made by the insurance industry to the growth of the country’s economy. And for this reason, loans were obtained from them. Another step to slow that the role of insurance is crucial to economic development is the creation of the NDIC to help slow the rate of distressed banks. Since then, the government has also recognized the significance of the insurance industry in risk management and growth. In Nigeria, the government has made various insurance plans mandatory as a result of this. As seen in different insurance. Acts requiring one of the several insurance covers offered in the nation’s motor insurance for every or any motor owner. Additionally, the government had mandated that all of her substantial buildings carry fire insurance.

As a result, I will emphasize in this study the role that the insurance industry has played in the economic growth of the country while staying within my area of expertise and the information that is within my grasp.

Situation Of The Problem

The Issue Nigeria’s Insurance Companies Are Having.

Here!? I wish to start a general debate about several issues that prevent insurance companies from achieving their goal of supporting economic growth. The following are some of these issues:

An Economic-social Problem. Religion, cultural background, economic income pretense for ostentations life to thrift and level of development are some socioeconomic elements that generally influence Nigerians’ attitudes toward insurance. Actually, “certain cultures, for instance, view life policy as cruel; as a result, some Muslims have demonstrated great religious innovation to life assurance.

Finally, because to the low personal prosperity available at our current stage of development and the fact that the majority of people are living paycheck to paycheck, insurance is given less attention. All of these contribute to the widespread issue of Nigerians’ negative attitudes regarding insurance.

Technical Issue

Technical issues in insurance cover issues with workforce, educational attainment, and weak capital bases. Anyone who knows anything about insurance will tell you that a lack of sufficient, technically skilled staff is the insurance industry’s main issue.

Initially. The lack of a property coordinated training program for the employees makes the matter worse because people were not interested in taking up insurance employment and those who eventually do so are underqualified for the position. As a result of inadequate premium collection, industry services fall short of expectations. Poor claim settlement and a lack of valid statistics.

Many people enter the insurance industry hastily and without the necessary funds or other prerequisites. Failure therefore becomes theirs when they experience a harsh economic position.

Local Legislative Issue

This is essentially the limitation placed on the insurance business by Section 18 of the Insurance Decree of 1976. The restriction is problematic because non-quoted public enterprises are unable to participate in insurance finding because investment is restricted to public companies with paid-up capital of at least one million naira. Although some large, multi-million naira companies are quieted, the majority of indigenous Nigerian companies are not, therefore insurance venture capital is not able to invest in their stocks. This restriction on the scope of insurance investment is a restraint on option investment selection because there are still very few quoted firms, which might potentially diminish revenue and grant in the sector by lowering the outlook for insurance finds to realize maximum value.

1.3 Study’s Purpose And Objective

Insurance has numerous goals, some of which are as follows:

I. First and foremost, it ensures that the insured will be reimbursed (paid) if the insured risk materializes.

II. Without an organization that closely monitors trade and commerce and offers assistance in times of need, the global economic system would undoubtedly come to a grinding halt.

III. Insurance company investments contribute to the funding of new projects, opening up work chances for job seekers and boosting national income.

1.4 The Meaning Of The Study

Need To Include Insurance In Programs For National Development

We all own this country, and we must come together to rebuild it. But how can one save the economy of a nation where he does not know how policies that directly impact him are received at dictatorship is the bone of human initiative? It was put together in a joint campaign by the former head of state, general…………………….. (RTD). When the government is having critical economic negotiations, the insurance corporations are frequently excluded. As a result, the sector fails to contribute to economic growth. They might fit in well because they don’t participate in government decision-making, particularly in those areas.

I therefore propose that the Nigeria Insurance Association (NIA), which represents the insurance sector, participate in national development goals. This will undoubtedly raise the nation’s degree of development.

The Term Definition

The definition of insurance is a safeguard against risk. A form of insurance is any tool designed to lessen the likelihood that a risk will materialize, lessen the severity of its damage should it occur, and compensate those who are harmed.