The Impact of Motor Insurance Policy on the Growth and Development of the Economy
Chapter One
Objective of the Study
The following are the objectives of the study.
- To know why Nigerian motorists embraced motor insurance policies.
- To create awareness of the compensation motor insurance policies.
- To ensure that the Nigerian motorist and third parties felt the impact of motor insurance policies.
CHAPTER TWO
REVIEW OF RELATED LITERATURE
Introduction
The insurance industry is a highly specialized industry that gives greater security to the fortunes of common people and among the whole society. It is one of the financial institutions in Nigeria today that aid economic development and growth. Egeria (1996:5) describes insurance as handmade of commerce which plays a vital role in the going concern of humans as an economic animal. Chikeleze and Echekoba (2008:186), defined insurance as a contract whereby one party, called the insurer, in return for a consideration, called the premium, undertakes to pay the other party, called the insured a sum of money or its equivalent in kind upon the happening of specified event that is contrary to the interest of the insured. The modern insurance business was introduced into Nigeria in the late 20th century by the British merchant, who established trading posts on the west coast of Africa. Before the Advent of the European to Nigeria, organizations similar in purpose to insurance company were in existence known as traditional social insurance scheme. They include the Isusu, Social clubs, Age grade, etc, According to Okonkwo (1998:6), the first insurance company to register its presence in Nigeria was Royal Exchange Assurance with its office in Lagos in 1921. The enactment of workman compensation ordinance in 1942 and the Road traffic Act of 1945 both contributed to the meaningful takeoff of insurance industry in Nigeria. The need for control and timely intervention of government led to the formation of the National Insurance Corporation of Nigeria (NICON). In 1986, because of the Structural Adjustment Programme (SAP) brought about the emergence and proliferation of financial institution especially Deposit taking institution and insurance companies. Insurance capital base was raised from N1-N2million then. Fall out from this event was that only 57 out of 152 insurance companies qualified for registration. This was coupled with tighter control over the industry. Insurance represents a promise of future compensation relating to specific losses in exchange for periodic payments. Insurance are similar to banks and capital markets as they solve the need of business units and private households in financial intermediation. The only way out is to reposition the organization and business to meet with the demand of the period, create more awareness about the industry, training and retraining of staff, minimization of the wastages and maximization of gains in the interest of the economy. Insurance is bought in order to hedge the possible risks of the future which may or may not take place. This is a mode of financially insuring that if such an incident happens then the lost does not affect the present well-being of the person or the property insured. Thus through insurance a person buys security and protection. One of the important outcomes of the consolidation and recapitalization in this sector was the recertification of 49 companies as against over 100 companies that were in existence in 2005. However, in spite of the reforms, the insurance sector is still faced with daunting challenges, which must be addressed to galvanize the economy.
CHAPTER THREE
RESEARCH METHODOLOGY
Research design
The researcher used descriptive research survey design in building up this project work the choice of this research design was considered appropriate because of its advantages of identifying attributes of a large population from a group of individuals. The design was suitable for the study as the study sought to examine the impact of motor insurance policy on the growth and development of the economy.
Sources of data collection
Data were collected from two main sources namely:
(i)Primary source and
(ii)Secondary source
Primary source:
These are materials of statistical investigation which were collected by the research for a particular purpose. They can be obtained through a survey, observation questionnaire or as experiment; the researcher has adopted the questionnaire method for this study.
Secondary source:
These are data from textbook Journal handset etc. they arise as byproducts of the same other purposes. Example administration, various other unpublished works and write ups were also used.
Population of the study
Population of a study is a group of persons or aggregate items, things the researcher is interested in getting information on for the study the impact of motor insurance policy on the growth and development of the economy. 200 staff Nicon insurance was selected randomly by the researcher as the population of the study.
CHAPTER FOUR
PRESENTATION ANALYSIS INTERPRETATION OF DATA
Introduction
Efforts will be made at this stage to present, analyze and interpret the data collected during the field survey. This presentation will be based on the responses from the completed questionnaires. The result of this exercise will be summarized in tabular forms for easy references and analysis. It will also show answers to questions relating to the research questions for this research study. The researcher employed simple percentage in the analysis.
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATION
Introduction
It is important to ascertain that the objective of this study was to ascertain the impact of motor insurance policy on the growth and development of the economy.
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 motor insurance policy and Nigeria’s economic growth.
Summary
Modifying the fixed-effect model of Marijuana et al. (2009) and co-integration estimation technique, we examined the impact of motor insurance policy on the growth and development of Nigeria’s economy, number of insurance companies as well as total insurance Investment in addition to a control variable of inflation rate contribute to economic growth of Nigeria using a range of time. According to the results, insurance sector development promotes economic growth of Nigeria. Thus, function of insurance companies – providing means of risk management and performing mobilization and allocation of resources (Marijuana et al., 2009) – are important for economic growth. As increase in number of insurance companies contribute to economic growth according to the result, it is suggestive for insurance sector policy maker to implement the policies that are going to provide more insurance companies with high competitive mind and increasing efficiency in the insurance industry.
Conclusion
This study has succeeded in establishing that a direct or positive relationship exists between investment in motor insurance and economic growth in Nigeria. This means that building a formidable insurance industry in the country would immensely boost the country’s economic growth. Consequently, the federal government should use policy actions to protect both the insurers and the insured in the country; encourage people to patronize insurance companies as well as encourage insurance companies to always pay genuine claims promptly at the occurrence of the event insured against. This will encourage more people to buy insurance, thereby increase premium income and provide investible funds which can be directed into lucrative investments for increased capital formation and productivity.
Recommendation
Haven completed the study, the researcher recommends that adequate regulation should be targeted at providing institutional improvements, especially in risk management and product development of insurance companies. The causal relationship between economic growth and insurance development of Nigeria is limited and not direct. This is because the influence of insurance market development in performing the role of intermediation is tempered by some negative factors in Nigeria. These factors can be identified as low per capita income, lack of orientation of the importance of insurance, cultural values undermining the popularity of insurance and adequate regulatory framework for insurance industry in Nigeria.
Reference
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- Ezekiel. O.C. Being Proceeding of the 2003 NIA Workshop on Insurance ACT 2003. Nigeria Insurance Association.
- Arena M (2008). “Does insurance market promote Economic Growth? A cross-country Study for Industrialized And developing countries”. J. Risk Insur., 75(4): 921-946.
- Beck T, Webb I (2002). “Economic, Demographic and Institutional determinants of life Insurance Consumption across countries”. World Bank and International Insurance Foundation.
