AN ASSESSMENT OF THE EFFECT OF GOVERNMENT POLICY ON COMMERCIAL BANK LENDING ABILITY IN NIGERIA
ABSTRACT
This project work has critically highlighted the compact of claims settlements on profit maximization in insurance industry, the problems affecting effective claims settlement in Nigeria have been identified and how they can be controlled is also included in the study.Also circumstances given rise to claims, fraudulent claims and effect of inflation on claims settlement have been discussed and ways to solve them are inductive in the study.This study also examines the lapses and recommends some viable point (s) that can also contribute to the image of the industry.In conclusion, for effective claims settlement to arise, the insurer and the insured must agree as to the actual amount to be paid in the event of claims taking into consideration the principles and the risk guiding the handling of insurance claims.
TABLE OF CONTENT
Title page Approval pageDedicationAcknowledgementAbstractTable of contents
CHAPTER ONE1.0
Introduction
1.1 Background of the study.
1.2 Statement of problem
1.3 Purpose of the study
1.4 Significance of the study
1.5 Limitation of the study
CHAPTER TWO2.0
The Review Of Related Literature
2.1 Classes of insurance
2.2 Principles of insurance
2.3 Notification of claims
2.4 Investigation of claims
2.5 Circumstances given rise to claims
2.6 Claims report
2.7 Claim settlement under individual
2.8 The problems affecting effective claims settlement.
CHAPTER THREE
3.0Research Design And Methodology
3.1 Source of Data3.2 Location of Data
3.3 Method of Data collection
CHAPTER FOUR
4.0Findings
CHAPTER FIVE5.0
Recommendation And Conclusion
5.1 Conclusion5.2 Recommendation.
BIBLIOGRAPHY
CHAPTER ONE
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 something unexpected should happen which causes the insured to sustain a financial loss (Lawal, 2003).
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.
Furthermore, 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 (Willer, 2004).
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 etc.
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 (Yinka, 2002).
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.
National Insurance Corporation is a corporation brought into being on July 1, 19
68 by Cap 263, Laws of the Federal Republic of Nigeria (LFN) of 1990 as amended (hereunder referred to as NICON Act). NICON Assurance Plc was incorporated on Oct 2001 and a private treaty which became effective in October, 2001. NICON Assurance Plc acquired the business (assets and liabilities) of national Insurance Corporation of Nigeria (NICON or the corporation). This acquisition is to the extent, to set out the transaction and in exchange for which 1,000,000,000 shares of NICON Assurance Plc was issued to the ministry of finance in corporate as the sole shareholder of NICON. The name was changed to NICON insurance Plc.
NICON on creation by law had initial share capital of two million naira divided into 20,000 ordinary shares of N100 each to be held exclusively by the Federal Government of Nigeria. Since then, the share capital of the corporation has been increased several times through capitalization of profits. Federal Government’s shares held are on its behalf by the Federal Ministry of Finance incorporated, the federal government’s investment vehicle.
The corporation’s share capital now stands at one billion naira divided into 5000,000 ordinary shares of N200 each. Under the NICON Act, the minister can increase the share capital without limit subject to the approval of the Federal Executive Council.
Today National Insurance Corporation of Nigeria carries out its business under the style and the name of NICON Insurance Corporation.
Prior to the establishment of the national Insurance Corporation of Nigeria (NICON), the Insurance industry was largely made up of foreign owned insurance companies whose business operations did little to foster the economic and social development of the country. Furthermore, before the enactment of the Company’s Act 1968, like most foreign companies, they operated as branches of their parent companies, which were invariably domiciled abroad.
NICON was created in order to break the domination of the Nigeria insurance industry by foreign companies were remitted abroad, thereby putting a let of pressure on the country’s balance of payment. In 1962, an adviser to the Federal Government of Nigeria on insurance matters submitted a feasibility report on the benefits of insuring export-bound Nigeria agricultural produce. This found the basis of subsequent deliberations and recommendations on the formation of an indigenous government owned insurance company with the encouragement given to developing nations by United Nations Committee on Insurance Companies urging them to seek considerable economic independent by investing directly in critical sectors of the economy such as banking and insurance. At the request of the government of Nigeria an insurance expert was send by the United Nations to provide technical assistance. The establishment of a government-owned Insurance Corporation was recommended. It was envisaged that all operating insurance companies in the country would be compelled to cede ten percent (10%) of their risks to the proposed government owned insurance company in the first phase of the corporation’s development. The second phase of the corporations operations was expected to vest in the corporation of the sole right to insure government properties by which time it was believed, the corporation would have acquired by the requisite technical and administrative skills and some experience in re-insurance.
However, NICON was by stature at inception given the sole right to provide insurance cover for all government asserts statutory corporations and state owned companies and with the powers to under-take re-insurance business.
1.2 STATEMENT OF PROBLEM
The very nature of insurance makes the creation of a good image a difficult task (Yinka, 2002). 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.
b. 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.
