CHAPTER ONE

1.0        INTRODUCTION

1.1 BACKGROUND OF THE STUDY

  I can remember a definition which I was forced to cram in my first year by Mrs. Helen Ibeabuchi she defined insurance as an economic path towards unlimited opportunities for financial growth and fulfillment in life through protection and security. Winston Churchill once referred to insurance as “ bringing the magic of averages to the rescue of million”. This magic is the outcome of voluntary economic co-operation by human beings. Before this was the working out of the law of average which tells the probability or chance that an event will or will not happen.

Insurance is an arrangement by which one party (the insurer) promises to pay another party a sum of money if some thing unexpected should happen which causes the insured to sustain a financial loss.

The responsibility for paying such losses is then transferred from the policyholder to the insurer. In return, for accepting the burden of paying for losses when the events occur, the insurer charges the insured a price, the insurance premium the development of the insurance premium.

This development of the insurance industry in Nigeria data back to 1921.

Further more, growth was not phenomenal until the Nigeria economy of the 60’s and early 80’s often described as the “ mushroomery era” of the market, obviously, a lot of the malpractices especially on claim settlement crept into the industry, which the earlier laws of 1961 and 1965 could not effectively cope with. There were cases of insurer denying liabilities on the robbery of a car on the ground that only theft cover is granted.

    The creation and maintenance of a good public image presents continuing difficulties and much still remains to be done. Also the danger of not appreciated by the public. Little general information is available in other field such as public liabilities, contractor, and all risk e.t.c.

In spite of this, the regulation of any insurance company depend to a large extent on the sort of claim service rounded by the company.

    An unreliable and inefficient claims department could rain the reputation of a company once they discover that the company is reluctant to pay or delays payment without good reason of their genuine claims.

In order to guard against delay in the settlement of claims the insurance decree of 1976 list some condition under which the director of insurance may council the certificate of registration of an insurance company. Therefore, an insurance who makes it a matter of regular practice of delaying claim payment may stand the risk of having his license canceled.

1.2 STATEMENT OF PROBLEM

The very nature of insurance makes the creation of a good image a difficult task. The theme “that insurance provide security and peace of mind” is a good one but basically we have nothing than a piece of paper to offer which promises to pay if…

“Out difficulties in promoting confidence arising from the following factors.

a. Insurance is so intangible and in many cases it has to be explained on a secure public interest by legible product such as a car which can provide immediate benefit and enjoyment.

   a.Insurance is highly technical: A policy is a contract which has to be carefully warded and misconceptions and doubts easily arise in public minds. Many people say that policies are written I deliberate jargon.

a.             The need for insurance is not really recognized more insurance is sold than it’s bought.

b.            Insurance are not always able to accept proposals, from all the soundly elements of selection often present.

c.             The value of insurance, not only to the individual but also to the economy of the country, is not easily appreciated by the general public. The fact that insurance is a export is slowly becoming known but parts played by branches such as find protection and aims protection are still not widely known.

  The public is slow to recognized that in many respects, insurance provide what almost amount to social services, a fact which is more readily appreciated where other industries are concerned furthermore, an unpleasant habit of non payment of premium is regrettably emerging among some policy holders most especially the co-operations and government owned companies. The Neagon for this unwholesome some development is that many of the insured out of ignorance and belief relegate insurance matters to the background in their scale of priority where expenditures are concerned.

     It is quite an indisputable fact that the industry had created some image problems for itself over recent years through the operational malpractice of its member particularly some unscrupulous brokers and fraudulent agents. As a result, many people perceived insurance as a legalized robbery. With this already dented image when companies are facing serious economic and financial problems. The answer quite clearly in aforementioned is that the need of insurance as a means of protecting investments has never much more manifested than now.

It is very difficult for companies. Individuals and even government to raise new capital to invest on various project and business enterprises.

Consequently, there is utmost need for every investor to take serious steps to secure and ensure that the investment already had are prevented from loss and distraction.

1.4 THE SIGNIFICANCE OF THE STUDY

     The misconception about insurance practice in Nigeria gives professional concern especially, in relation to claim settlement. Average Nigerians believe that an insurance is tend to interpret the rules to their own advantage by rejecting claims when one of these rules is not complied with by the insured. In Nigeria, the insurers operate the rules strictly like their colleagues in developed countries yet their image has been dented because the average Nigeria seems not to understand the practice of insurance.

     The important of this study will enable the insuring public to know the concept behind insurance practice and the rules guiding both the insurer and insured during the negotiation of claims. It is the aim of this study to state clearly that insurance industry is not set up to collect premium only but to reduce the risk where by the insured is given peace of mind that in the event of damage or loss to his or her property, certain sum of money will become payable.

     This study will also enlighten the general public that the insurers do investigated public policy where there is suspicious of fraudulent and exaggerate claims in the present competitive environment coupled with world wide recession, the implication for the insurance industry has been substantial drop in premium income for most classes of business and increasing incidence of claims. Therefore, insurance would not allow an insured person to take advantage of this economic recession by gaining that of their misfortune by deliberately damaging their property in order to claim the insurance money.

There have been allegations of malpractices, against the insurers. This research work would delve into such topics to determine whether they are factual.

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