The Problems Encountered by Intermediaries in the Nigeria Insurance Industry and the Future Prospects
CHAPTER ONE
OBJECTIVE OF STUDY
This study is aimed at achieving the following objectives.
- To find out the causes of the problem that the intermediaries encounter.
- The important of intermediaries in the insurance industry.
- Who are insurance intermediaries.
- To make suggestion on how to eradicate the problem.
CHAPTER TWO
LITERATURE REVIEW
EVOLUTION OF INSURANCE
“Uncertainty is the foundation of insurance” Bjorn (1999) and an interesting fundamental fact in life is uncertainty (Knight, 1921) cited by Ralph (2001). A positive outcome or negative outcome can result from uncertainty. When two possibilities have equal chances uncertainty tends to be high. Human beings are not always certain of the future; we only make predictions about the future based on our past experiences (Ralph, 2001). This is where risk comes in; virtually every human activity has an element of risk no matter how little (Bjorn, 1999); when a man proposes to a lady there is the risk that the lady will say no, when you make plan for a picnic during raining season, there is a risk that rain will fall, if you apply to a school for masters program you either get admitted or rejected therefore risk is involved, also when you submit your thesis proposal to your supervisor there is a risk of it been rejected that it is not properly done. Lot of risk entails an economic factor, for instance if your laptop is stolen you will need money to replace it. If the roof of your house collapses it will cost an amount of money no matter how little to fix it back. If a family losses its breadwinner, getting the school fees of the children paid could be a serious challenge. This is where the idea of insurance stem. Insurance is designed to provide protection against uncertainty. The major objective of insurance business is to hedge out the possible risk of the future which may or may not occur by selling security and protection. Although loss of life or injury incurred cannot be measured in monetary terms, in other words we can say that no amount of money is enough to compensate for the life of a loved one but it could be very frustrating when there is nothing to fall back on when such unexpected event occurs. This is one of the reasons why insurance has been designed to quantify such losses financially so as to ease the victim from the burden of loss. Therefore insurance protects and reimburses a person or collective body from contingent losses through financial means in return for regular payments of small amount called premium contributed to the insurance pool which is managed by insurance companies
INSURANCE AND HOW IT WORKS
It is important to note that there is no single definition for the term insurance, it is given different definition by various researchers depending on the angle from which they see it. But the clear thing we can see from the definitions is that they all have a common idea which is “insurance gives protection against losses” or “it transfers the risk of one person or a party to another” or it spread the risk of one person or a group of people among several people.
CHAPTER THREE
RESEARCH METHODOLOGY
INTRODUCTION
In this chapter, we described the research procedure for this study. A research methodology is a research process adopted or employed to systematically and scientifically present the results of a study to the research audience viz. a vis, the study beneficiaries.
RESEARCH DESIGN
Research designs are perceived to be an overall strategy adopted by the researcher whereby different components of the study are integrated in a logical manner to effectively address a research problem. In this study, the researcher employed the survey research design. This is due to the nature of the study whereby the opinion and views of people are sampled. According to Singleton & Straits, (2009), Survey research can use quantitative research strategies (e.g., using questionnaires with numerically rated items), qualitative research strategies (e.g., using open-ended questions), or both strategies (i.e., mixed methods). As it is often used to describe and explore human behaviour, surveys are therefore frequently used in social and psychological research.
POPULATION OF THE STUDY
According to Udoyen (2019), a study population is a group of elements or individuals as the case may be, who share similar characteristics. These similar features can include location, gender, age, sex or specific interest. The emphasis on study population is that it constitutes of individuals or elements that are homogeneous in description.
This study was carried to examine the problems encountered by intermediaries in the Nigeria insurance industry and the future prospect. NAICON, Abuja, Nigeria forms the population of the study.
CHAPTER FOUR
DATA PRESENTATION AND ANALYSIS
INTRODUCTION
This chapter presents the analysis of data derived through the questionnaire and key informant interview administered on the respondents in the study area. The analysis and interpretation were derived from the findings of the study. The data analysis depicts the simple frequency and percentage of the respondents as well as interpretation of the information gathered. A total of eighty (80) questionnaires were administered to respondents of which only seventy-seven (77) were returned and validated. This was due to irregular, incomplete and inappropriate responses to some questionnaire. For this study a total of 77 was validated for the analysis.
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATION
Introduction
It is important to ascertain that the objective of this study was to ascertain the problems encountered by intermediaries in the Nigeria insurance industry and the future prospect. In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in addressing the challenges of the problems encountered by intermediaries in the Nigeria insurance industry and the future prospect.
Summary
This study was on the problems encountered by intermediaries in the Nigeria insurance industry and the future prospect. Three objectives were raised which included; To find out the causes of the problem that the intermediaries encounter, the important of intermediaries in the insurance industry, who are insurance intermediaries and to make suggestion on how to eradicate the problem. A total of 77 responses were received and validated from the enrolled participants where all respondents were drawn from NAICON, Abuja. Hypothesis was tested using Chi-Square statistical tool (SPSS).
Conclusion
The research carried out has confirmed that insurance companies in Nigeria recognize the moral dilemma in claims management; they understand that if they mismanage insured’s claims in an unethical manner it will result in bad consequence which will fall back on the insured or the beneficiary, the personnel involved in processing the claim and also the company as a whole either directly or indirectly. Therefore they discharge this responsibility in a professional way making sure that all genuine claims are settled and only fraudulent and ingenuine claims are repudiated. However the challenges involved in claims management has really affected and it is still affecting the perception of people on how insureds claims are handled by Nigeria insurance companies. From this study it is clear that the insurance business sector in Nigeria still has much room for improvement and development. We found out throughout research survey the issues diminishing mutual trust between the insurers and insured’s. The improvement of this mutual trust will boost improvement and rapid development in this insurance market.
Recommendation
Policies should be formulated to address firm-specifics and macroeconomic fundamentals that will drive down the high wedge between total insurance claims and total insurance income to further strengthen the efficiency of financial intermediation which will impact positively on economic growth. There is need to strengthen the supervisory framework to curb tendencies for rent seeking behaviour of insurance companies management.
There is need to strengthen the overall financial system with which the insurance sector operates, if the potentials of the insurance sector will be fully realized.
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