PROBLEM ENCOUNTERED BY INTERMEDIARIES IN THE NIGERIA INSURANCE INDUSTRY AND THE FUTURE PROSPECT

CHAPTER ONE

INTRODUCTION 

1.1        Background of the study

1.2        Statement of problem

1.3        Objective of the study

1.4        Research Hypotheses

1.5        Significance of the study

1.6        Scope and limitation of the study

1.7       Definition of terms

1.8       Organization of the study

CHAPETR TWO

2.0   LITERATURE REVIEW

CHAPETR THREE

3.0        Research methodology

3.1    sources of data collection

3.3        Population of the study

3.4        Sampling and sampling distribution

3.5        Validation of research instrument

3.6        Method of data analysis

CHAPTER FOUR

DATA PRESENTATION AND ANALYSIS AND INTERPRETATION

4.1 Introductions

4.2 Data analysis

CHAPTER FIVE

5.1 Introduction

5.2 Summary

5.3 Conclusion

5.4 Recommendation

Appendix

Abstract

Insurance is an intangible service. It is a promise to provide for financial losses to individuals and companies upon payment of an annual premium as the consideration and is compensated once any insured perils operate. The loss has to be unforeseen and accidental. This study looks at the problems encountered by insurance broker in Nigeria insurance industry. The study was conducted on the insurance companies registered and licensed by the Nigerian Insurances Regulatory Authority. Data was collected using questionnaires which were hand delivered to insurance companies targeting business development executives in self-addressed envelopes. Some questionnaires were emailed to the officers in the different companies to the convenient of the respondents. The results were analyzed using descriptive cross sectional design as well as chi-square statistics due to the qualitative nature of the data.

CHAPTER ONE

INTRODUCTION 

• Background of the study

The need for intermediaries in insurance market in Nigeria is an issue which its important cannot be over emphasized. Research has shown that the problems encountered by the intermediaries has an impact on the growth of insurance level in our society, there is a wide spread of lack of what benefit it is to the society. Research has shown that there is a significant relationship between the extent to which one understands and the importance one attaches to insurance. The more clear and understandable one finds insurance to be and the more likely it is that the insurance intermediaries will be know the importance of insurance before the facilitators can be recognized. This shows that low level of literacy constitutes to the problems encountered by the insurance intermediaries. Because the intermediaries work for the insurance company, any problem that affects the company affects them The experience of some people who had be dealings with insurance over the years ha snot be very cordial such unfavourable relationship had been publicize over the years that it has created a poor perception of insurance intermediaries and the insurance companies to the general public. Insurance have not help issues by their reticent in publishing their activities. One has to be aware of insurance before one makes a conscious effort to understand what it is all about.  The insurance industry has the duty to create awareness of the existences of their intermediaries and their industry in the minds of the public. One of the earliest and the most resilient problems the insurance industry, and the broking firms in particular has been contending with and will continue to contend with is the problem of ignorance as the benefits of insurance products. Many do not know what insurance is all about; even the educated ones

Some believe insurance is a smart way of extorting money from the people. The problems created by some dubious practitioners who will collect premium without remitting same to the appropriate quarters do not help matters either. I t is believed that insurance practitioners, especially the brokers will still need to do more in this area, especially in educating the public on the numerous benefits of insurance products and how such benefits can be harnessed. This will need intensive campaign at the grassroots level. Inadequate efforts in this direction have detlied the huge premium that we are expecting from the insuring public. Until very recently, May, 1999 to be precise, we have been under the disruptive influence of military dictatorships. The system was largely bastardized and the impact on the economic growth and development is so profound. Of course you know that anything that affects the- economy will also affect the volume of business and so the brokers market. Even now that we are in a democracy, the full impact on the political and economic growth are not being felt yet. Government will need to do more to enhance the process of turning around the economy to increase employment and its subsequent multiplier effect on the economy as a whole. Apart from this, it is also important that the trouble spots in the country where ethno-religious crises have become the order of the day need to be given proper attention with the view to reducing the conflicts level that is almost tearing the nation apart. Expectedly, they have wider impact on the social environment as a whole. Socially, the level of trust which is the core of social and business relationship is currently at its lowest ebb. This is affecting business transactions within the economy. Just as the way it is affecting the inflow of private foreign investors (PFI) that would have assisted in broadening the economic base of the nation. Much still needs to be done to guarantee enduring trust and confidence that are panacea to knowing social relationship that economy needs now. Furthermore, as a result of the persistent political and economic crises, we have been unable to educate the public about what they stand to gain from insurance. Hence the old attitude towards the insurance that was based on ignorance keeps rearing its ugly head against the growth of the industry, especially the broking subsector. The age old religious belief that God is the best insurance is yet another factor. It is trrue that God is the best insurance. However, we have to note the fact that insurance is God’s creation through man to address a wide variety of human needs, particularly at crucial times “and of course the issue of sharia. The antidote is appropriate product development and aggressive campaign. Individual insurance companies have the responsibility of letting the public know that its intermediaries exist and what functions they perform. Literature such as one of the roles of insurance companies and intermediaries to individuals and the society in general should be widely circulated. Handling of insurance claim is another area were insurance intermediaries encounter problem. This is obvious because when an insurance company could not settle her claim with the insured (policyholder) the impact fall on the intermediaries that facilitate contractual relationship between the insured and the insurance company. This makes the general public to call both the intermediaries and insurance companies fraudsters. A good insurance transaction lies essentially on the ease with which are insurer claim cheque is received. Claims handling is one area were an effective communication is necessary, as well as reaching prompt decision immediately all facts are known. The inability of the insurance companies to do this makes it difficult for an intermediary to help his clients in sorting out their claim with the company.

Location of the insurance company also is one of the problems encountered by intermediaries because they find it difficult to transact business in rural area. There is no comparison between an insurance company situated in the city and that of rural area. Insurance company situated in a rural area might not be progressing because of the low level of literacy of people in the area.

1.2       STATEMENT OF PROBLEM

The image of insurance industry and their intermediaries is noting to write home about. This is to those who do not know what insurance is all about. Having complied with the rules and regulations of the insurance supervisory authorities in which they operate, though there are still problems in the insurance companies and the among them are as follows.

(a) Ineffective publicity, lack of information about different classes of insurance and benefits behinds each classes of insurance to the policyholder is acting as one of the problems being encountered by the insurance companies and their intermediaries.

(b) Public unawareness of the essence of insurance takes time for the brokers and agents to be known in the public. Many of our people today are still ignorance of what insurance is all about and this is really telling on the insurance companies.

(c) Location of the insurance company is one of the problems being encountered by insurance intermediaries.

(d) The find it difficult to transact business in a small area. Take for instance, an insurance company whose Head office is at Ngwo will be loosing a lot while other competitors situated in the city such as Lagos are progressing.

(e) Competition among the brokers and agents by using unorthodox method which is due to variation in rates. There has been always difficult among these intermediaries. Another problem is what affects the insurance companies also affect them.

1.3       OBJECTIVE OF STUDY

This study is aimed at achieving the following objectives.

1. To find out the causes of the problem that the intermediaries encounter.
2. The important of intermediaries in the insurance industry.
3. Who are insurance intermediaries.
4. To make suggestion on how to eradicate the problem.

1.4 RESEARCH HYPOTHESES

To aid the successful completion of the study, the following research hypotheses were formulated by the researcher;

H₀: Insurance broker do not play any significant role in the insurance industry

H₁: Insurance broker do play a significant role in the insurance industry

H₀²: there is no significant relationship between insurance intermediaries and the growth of insurance business in Nigeria.

H₂: there is a significant relationship between insurance intermediaries and the growth of insurance business in Nigeria.

1.5       SIGNIFICANT OF THE STUDY

The study will be of immense value to brokerage firm, the insurance companies, and the general public and to student of insurance and other related fields.

The work will be of immense help to future researchers who will make their own investigation into this subject area.

The study will reveal the important of these intermediaries to the insurance company. Having mentioned some of the jobs done by the intermediaries, there are other areas by which they are useful to the company.

1.6 SCOPE AND LIMITATION OF THE STUDY

The area of this thesis is Nigeria. The research is to find out the problems encountered by intermediaries and the causes.

1. a) AVAILABILITY OF RESEARCH MATERIAL: The research material available to the researcher is insufficient, thereby limiting the study.
2. b) TIME: The time frame allocated to the study does not enhance wider coverage as the researcher has to combine other academic activities        and examinations with the study.
3. c) FINANCE: The finance available for the research work does not allow for wider coverage as resources are very limited as the        researcher has other academic bills to cover.

1.7 DEFINITION OF TERMS

Brokers: Person who buys and sells for others. And regarded as professional expert. The gives advice and recommends to people.

Agent: Person who acts for or who manages the business affairs of other.

Premium: A little consideration which the insured pays to the insurer in view of the risk insured so that if loss occur the insurer will put the insured in the same financial position he was before the loss.

Insured: The party entitled to receive money under an assurance contract on the happening of a stated contingency.

Liability:         State of being liable or responsibility for an act.

1.8 ORGANIZATION OF THE STUDY

This research work is organized in five chapters, for easy understanding, as follows Chapter one is concern with the introduction, which consist of the (overview, of the study), statement of problem, objectives of the study, research question, significance or the study, research methodology, definition of terms and historical background of the study. Chapter two highlight the theoretical framework on which the study is based, thus the review of related literature. Chapter three deals on the research design and methodology adopted in the study. Chapter four concentrate on the data collection and analysis and presentation of finding.  Chapter five gives summary, conclusion, and recommendations made of the study.

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