The Impact of Social Insurance on the Nigerian Economy
Chapter One
OBJECTIVE OF THE STUDY
The objectives of the study are;
- To ascertain the relationship between insurance premiums and economic growth
- To determine the effect of non-life insurance premiums on the economic growth in Nigeria
- To ascertain the impact of social insurance on Nigeria’s economy
CHAPTER TWO
REVIEW OF RELATED LITERATURE
INSURRANCE:
A promise of compensation for specific potential future losses in exchange for a periodic payment. Insurance is designed to protect the financial well-being of an individual, company or other entity in the case of unexpected loss. Some forms of insurance are required by law, while others are optional. Agreeing to the terms of an insurance policy creates a contract between the insured and the insurer. In exchange for payments from the insured (called premiums), the insurer agrees to pay the policy holder a sum of money upon the occurrence of a specific event. In most cases, the policy holder pays part of the loss (called the deductible), and the insurer pays the rest. Examples include car insurance, health insurance, disability insurance, life insurance, and business insurance.
Types of Insurance
MICRO-INSURANCE
The contribution of insurance to an economy‟s growth and efficiency is not the only entry point into its role in development. The contribution of insurance to poverty alleviation and the welfare of the poor is also potentially of considerable importance, although the quantitative evidence on this point is not on very firm grounding. Nonetheless, case studies and other qualitative evidence make a persuasive case that the potential social value of so-called micro-insurance provision to poor households and small-scale entrepreneurs warrants a great deal more experimentation with business models and products to develop scale able approaches that combine commercial and philanthropic elements. As noted above, patterns of insurance coverage suggest a positive correlation with income – at least up to a point where the value of insurance begins to diminish relative to the value of overall household assets. But this does not tell us anything about the potential social value of insurance provision at lower levels of income – only that poor consumers either do not or cannot purchase insurance at currently prevailing prices and availability. Moreover, insurance market development faces many special informational challenges that have been extensively documented in economic research even in wealthier countries. Put simply, insurance is likely to be relatively more expensive – even prohibitively so – for low income households and small-scale entrepreneurs because of the high informational problems and transactions costs relative to the size of the risk to be insured. As a result, most types of insurance are simply not available to the vast majority of the world‟s poorer citizens. In the absence of risk pooling mechanisms, plunges in incomes due to death, disability, and adverse agricultural outcomes often translate into substantial decreases in consumption and investment that can permanently set back a poor family‟s livelihoods and prospects. When drought or floods lead to low agricultural yields, critical health interventions may be delayed, education of younger members of a household put on hold indefinitely, and land, livestock or equipment permanently forfeited. Due to the catastrophic consequence of such losses, there is extensive evidence that in the absence of formal insurance poor households and communities attempt to „selfinsure‟ through a combination of building assets and diversifying sources of income. The result most likely is investment in a set of lower risk but also lower return activities – and even this degree of self-insurance is highly incomplete. There are also a variety of mechanisms that have emerged at the community level, such as community pooling of informal insurance contributions to cover burial costs. Community-based insurance mechanisms surmount the problems of transactions costs and lack of legally enforceable contracts through personal relationships and piggybacking on traditional small-scale financial collection mechanisms, similar to the early stages of micro-credit. However, they offer only feeble protection in the face of community-wide, covariate shocks, since they do not typically pool risk across broader populations and are limited in the types of products they can provide.
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 the impact of social insurance on Nigerian 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 the impact of social insurance on Nigerian economy. 200 staff of selected insurance companies in Enugu state were 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.
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATION
Introduction
It is important to ascertain that the objective of this study was to ascertain the impact of social insurance on Nigerian 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 social insurance on Nigerian economy
Summary
This study was on impact of social insurance on Nigerian economy. Three objectives were raised which included: To ascertain the relationship between insurance premium and economic growth, to determine the effect of non-life insurance premium on the economic growth in Nigeria, to ascertain the impact of social insurance on Nigeria economy. In line with these objectives, two research hypotheses were formulated and two null hypotheses were posited. The total population for the study is 200 staff of selected insurance companies in Enugu state. The researcher used questionnaires as the instrument for the data collection. Descriptive Survey research design was adopted for this study. A total of 133 respondents made financial planners, technical assistants, senior staff and junior staff were used for the study. The data collected were presented in tables and analyzed using simple percentages and frequencies
Conclusion
This study has succeeded in establishing that a direct or positive relationship exists between investment in 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
The premium should be reduced, so that it can be of benefit to majority of individuals by insuring their property. There should be a cheap means of handling risks to the insured in view of the fact that the principle of large number is brought to bear in the practice and operations of insurance. There is need for a review of the relevant insurance statutes and regulations. These laws came into force at a time when the sector was heavily regulated. These laws should be reviewed to make them suitable for a deregulated insurance sector. The federal government should use policy actions to structure better, the insurance industry in the country. This would solidify the status and operations of the insurance companies in the country The federal government should also use regulations to obligate insurance companies to always keep their own part of every agreement reached with their clients during periods of loss, accident, etc; and as such encourage more Nigerians to start trusting and patronizing insurance companies
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