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A study of the effects of low insurance patronage on performance of insurance companies in Nigeria. A case study of selected companies (industrial and general insurance (IGI) plc and national insurance corporation of Nigeria (NICON) plc.




The study is on “A study of the effects of low insurance patronage on performance of insurance companies in Nigeria. A case study of selected companies (industrial and general insurance (IGI) plc and national Insurance Corporation of Nigeria (NICON) plc.”. The study has seven objectives and five research questions. The study employed the survey approach for the collection of primary data, that is, by preparing questionnaire, personal interviews, observations and telephone interviews to gather information from the targeted respondents. 58 copies of the questionnaire were given out and 54 were returned duly complete. The sample size of this research was determined with the Yaro Yamen formula. The findings show that the ignorance of the public on the importance and role of insurance is a contributing factor to the bad image of insurance industry in Nigeria. Non-settlement of claims is an important reason for poor public image of the insurance industry in Nigeria. The ignorance of the public on the importance and role of insurance is a contributing factor to the bad image of insurance industry in Nigeria.  The study therefore recommended among others that the insurance companies should set up the public relations panel who will be responsible and capable of promoting the image of the company and if this is done in all companies will in the same vein improve the image of the industry. This can be done through radio, television, hand bill etc. advertising and also creating awareness in our communities through seminars, even in the rural areas. The government should also set up bodies who ensure that the laws made by the government to regulate the industry is followed adequately and obeyed. And any defaulter should be seriously punished irrespective of the person’s personality.



1.0     Background of the Study

Insurance is the backbone of every economy. It has been known to be a formidable and indispensable business in the sense that no economy can grow without insurance. Since the existence of insurance in Nigeria, the industry has contributed immensely to the growth and development of industries and the country at large. It is also very important to note that insurance is a mechanism by which risks can be managed by transferring the risks from one shoulder (the insured) to another (the insurer) hence there is a compensation (premium) made by one party for the fortuitous loss. It is a business that exists for the existence of other businesses. It is quite unfortunate that despite the important role insurance plays in an economy, its importance has not been perceived in the third world countries like Nigeria. Majority of Nigerian populace is yet to perceive the efficacy of insurance which therefore results to poor public image and low patronage of insurance products.

According to Ibekwe (2011:12) “Image of an organization is the picture as painted in the minds of people- people who may want to relate with the organization. “The insuring public see insurance practitioners as professional and legalized fraudsters who are always willing and ready to collect premium, but reluctant and unwilling to settle claims. Also, according to Mordi (1990:1) “the image which an organization has is a matter of perception of the viewers. The perception itself is the result of the objective and subjective factors from the point of view of the observer associated with the organization under consideration”. Mordi further stated that “the public is the image givers while the image takers are specific persons, institutions and industries. Image of industries does not just come suddenly, it develops overtime.

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The researcher wants to find out the causes, effects and remedy to low insurance patronage in Nigeria.

1.1 Overview of Industrial and General Insurance Company (IGI) PLC)

Industry and general insurance company PLC is a limited liability company that was incorporated on the 31st of October, 1991 and commenced operation in January, 1992. The company deals on both life and non-life insurance. The varieties of cover include: motor, oil and gas, marine and aviation, pensions, life assurance and financial advisory services. The IGI group is the largest insurance company in Nigeria and the largest underwriter in West Africa. Insurance remains the flagship of the group which has shareholders’ funds in excess of thirty-one billion naira (N31bn) and assets base in excess of forty-five billion naira (N45bn), with subsidiaries and strategic investments in other diverse sectors, notably; Real Estate, Waste Management and Engineering. It operates in forty five (45) branches spread across Nigeria and other African countries, notably: Uganda, Rwanda, Ghana and Gambia. With representative Offices in London and Washington, D.C. the company has established a reputation for excellent delivery of insurance products and services especially in special risks such as oil and energy, engineering, aviation and industrial risk management.

Their mission is to create, preserve and protect wealth, while their vision is to be the preferred provider of insurance risk management and financial services (










Source: Industrial and General Insurance Company PLC Journal

1.1.2   Overview of National Insurance Corporation of Nigeria (NICON)


National Insurance Corporation of Nigeria (NICON) is fully owned by the Federal Government of Nigeria. The corporation was established by Decree Number 22 of 1969 (as revised by Cap 263 of 1990 LPN).

With the main objective of assisting in the development of insurance industry in Nigeria and specially to ensure that the Federal Government’s assets and properties are fully protected by way of insurance.

The corporation which is the leading insurance company in Nigeria accounts for over 45% of the total premium income of Nigeria insurance market. In 1975, a gross premium income of N293.3 million with a profit of N112.5 million. The corporation hit the billion marks as its capital base raised at one billion since 1996. This made the corporation one of the foremost insurance companies in Africa. It has ten (10) zonal offices and 48 branches located in virtually every state in the country and lead in the underwriting of such personal line insurance such as life, motor, marine and aviation, oil and energy and all other special target risks. The corporation also has a contact office in London for its international operation.

NICON Insurance Corporation is blessed with a core of well trained and dedicated staff based on the realization that the greatest asset of the corporation lies on its staff strength. Above all, the corporation emphasized on the prompt settlement of claims in recognitions of the importance of paying claims. Several measures have been put in place that genuine claims are paid when due without bottlenecks. The corporation is currently being managed by a team of seasoned professional headed by Mrs. P.G.M sourced as its Managing Director, followed by Mr. S.O Sdade, Executive Director and other technical Directors of the company.

The corporation is widely invested in major quoted stock as well as in a number of projects all over the federation. Some of the corporation contributions to the economy of the country include the establishment of the Nigerian Agricultural Insurance. The corporation has its headquarters in Abuja, Nigeria at NICON Plaza, Plot 242 Muhammed Buhari way, Central Business District, Abuja, 5009, Nigeria.

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1.2    Statement of the Problem

Generally, in Nigeria, the public image of the insurance industry to the Nigerian Economy. There is low patronage of insurance products as a result of this misconception of the general public. The public has seen the insurers as legalized criminals, cheats and dupes who are always willing to receive premiums but unwilling to settle genuine claims at the appropriate time or not settle at all. The insurance industry on the other hand claims that the poor image of insurance industry has partially been contributed by the mushroom insurance companies, the insured and intermediaries. According to the industry, the mushroom companies have contributed to the existing poor image because they establish such companies with low capital base with the intention of not settling claims.

Also, the industry has blamed it on the insured due to the insured’s breach of insurance contract by way of “misrepresentation” and “utmost goodfaith”. Misrepresentation in the sense where the insured provides a false statement during an interview or an application for the policy. And utmost goodfaith for the insured to make a full disclosure of all material facts to the underwriter without being asked.

Furthermore, it has also been caused by lapses created by the insurance intermediaries (agents and booker). An insurance broker or agent can be liable to his insured client for failing to obtain the proper coverage and causing the insured client not to have insurance for his or her loss. Therefore, a broker been liable for either negligence or breach of insurance contract contributed to the poor image of insurance industry.

The aforementioned has resulted to the problems that have contributed to the poor image of the insurance industry. This work is aimed at finding out the rationale behind this poor image and proffer solution which will rather change insurance for good.

1.3  Objectives of the Study

The public who are supposed to take-up one insurance policy or the other have reneged, due to their negative perception about the insurance industry. This poor image has caused more harm than good to the industry. Therefore, the main purpose of this work is to find out the main reasons behind this poor image; despite the fact that insurance has been the provider of financial security to human life and properties which aims at knowing the effects of this poor image on the parties involved and the nation at large and also how these problems can be resolved for the growth of the nation’s economy.

In order to achieve the main objective of this work, this research has been designed to find out specifically the following:

  1. Whether actually there is poor image in insurance industry
  2. The cause (causes) of insurance bad image.
  3. The key people responsible for it; whether it is the insured, the intermediaries, the insurer or the regulating bodies.
  4. The effect of this poor image on the insured, the insurer and the nation in general.
  5. The position of Insurance Act, 2003 as a means of controlling bad image of insurance industry.
  6. Whether the industry is doing anything to improve the image.
  7. The solution to the problems of poor public image of insurance industry for growth of the industry and the nation at large.

1.4  Scope of the Study

This research work is meant to cover all the insurance companies in Nigeria. However, due to time constraint and other logistics it was not possible for the researcher to collect data from all companies in Nigeria, hence, two (insurance companies are selected randomly from all insurance companies in Nigeria which are; Industrial and General Insurance (IGI) PLC  and National Insurance Corporation of Nigeria (NICON). It is believed that two (2) giant insurance providers will provide adequate information needed for the purpose of this work. 

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1.5  Research Questions

  1. Does the Nigerian insurance industry have poor image?
  2. What has been the cause of this bad image?
  3. What does this bad image have on the insurance industry?
  4. Have government done anything to checkmate this bad image?
  5. What has the industry done so far to improve the poor image in order to encourage the public?

1.6  Statement of Hypothesis

Hypothesis I

H1: The mushroom insurance companies are the cause of poor insurance image.

H0: The mushroom insurance companies are not the cause of poor insurance image.

Hypothesis II

H1: The breach of utmost goodfaith on the part of the insured is a factor behind insurance bad image in Nigeria.

H0: The breach of utmost goodfaith on the part of the insured is not a factor behind insurance bad image in Nigeria.

Hypothesis III

H1: Non-settlement of claims is an important reason for the poor public image of the insurance industry in Nigeria.

H0: Non-settlement of claims is not an important reason for the poor public image of the insurance industry in Nigeria.

1.7  Significance of the Study

The research work has specifically been designed to alleviate the poor public image of the insurance industry in Nigeria and rebuild the image of insurance for better. However, it will also benefit individuals, interest groups and the society at large. More so, it will also assist the insurance companies and the regulatory bodies in making decisions. Nevertheless, it will also serve as a guide to the young researchers and also form the bases in the course of carrying out their own research.

1.8 Definition of Terms

  1. Business: It is the medium through which insurance intangible products can be translated which can be through the internet, insurance companies and intermediaries.
  2. Claims: A demand by the insured upon the insurer to fulfill his guarantee of indemnity by reason of an uncertain and fortuitous damage to property or loss of life.
  3. Economy: The entire network of producers, distributors and consumers of goods and services in a local, regional and national community.
  4. Indemnity: This is the placing of the insured in the same financial condition he was before the loss.
  5. Insurance: A system of transferring the responsibility of paying for losses from one party to the other.
  6. Insurance Industry: This is the aggregate of insurance companies in Nigeria.
  7. Insured: The person (or corporation) who has purchased insurance cover. He is also known as policyholder.
  8. Insurer: This is the insurance company or other organization that provides insurance.
  9. Intermediaries: They are those who act as middlemen in the insurance business. They are classified into two (2), namely: the agents and the brokers.

Agents are those who normally act on behalf of their principal (the insurance company) and the powers are limited to the terms of the appointment, while a broker is a professional who solicits insurance business on behalf of insurance company but does not represent insurance company in a capacity unlike agents.

  1. Mushroom Insurance Companies: These are insurance companies that do not possess the attributes of good insurance company.
  2. Organization: It is an entity comprising multiple people such as an institution or an association that has a collective goal and is linked to an external environment.
  3. Premium: This is the money paid by the insured to the insurer for specified period of time in the policy.
  4. Public image: This is the actual perception of the public towards the insurance industry.

    Pages:  94

    Category: Project     

    Format:  Word & PDF        

    Chapters: 1-5                                 

    Material contains Table of Content, Abstract and References.


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