A Study Of The Problems Of Managing Insurance Companies In Nigeria: A Case Study Of National Insurance Commission (Naicom)

ABSTRACT

The main purpose of the study is to examine the problems of managing insurance companies in Nigeria. Two research questions and hypotheses are formulated to guide the study. Modern theory of financial intermediation formed the theoretical background of the study. The study adopted survey research design. The population sample of this research work consists of 140 staff in the life insurance department of NAICOM. Questionnaire was used to elicit data for the study. Mean score was used to analyse data for the study. The study found that the problems of managing the insurance company are Antagonistic and hostile economy, the market is doubtful of insurance companies, inadequate access to information technology, weak regulatory framework, weak regulatory framework and poor knowledge of insurance services by the prospective assured and the possible actions required to sort the problem of managing insurance companies are insurance must be well implemented, employing more adequate staff, sensitizing the populace, insurance companies must employ the expertise of first tier technology, exceptional customer service and  formulation of economic policies. The researcher recommended that claims managers should put forward strategic plans to ensuring that insurance claims complaint files are properly kept, monitored and handled for needs that may warrant its usefulness in the future. Secondly, state-of-the-art training mechanism should be put in place to enhance and improve the working pattern of a claim officer, which in variably might affect the organization efficiency of insurance companies.

CHAPTER ONE

INTRODUTION

• Background of the study

Insurance is a contractual arrangement in which an individual or entity, known as the policyholder, pays a predetermined amount of money, called a premium, to an insurance company. In exchange, the insurance company agrees to provide financial compensation or coverage for specified risks, losses, or events outlined in the insurance policy. The primary purpose of insurance is to mitigate the financial impact of unexpected events or risks that could potentially lead to significant monetary losses for the policyholder. Insurance is a financial arrangement that provides individuals, businesses, or other entities with protection against financial losses or risks by transferring the potential burden of these losses to an insurance company. In exchange for regular payments, known as premiums, the insurance company agrees to compensate the policyholder or beneficiary in the event of covered losses or events. Trowbridge (2018) stated that “Insurance is a contract in which one party (the insurer) agrees to indemnify or compensate another party (the insured) for losses or damages sustained as a result of specified risks or events, in exchange for the payment of premiums.”

Insurance is a crucial tool for managing risk and promoting financial stability. It allows individuals and businesses to focus on their activities without constant worry about potential catastrophic losses. However, it’s important to carefully read and understand the terms of an insurance policy before purchasing it to ensure that the desired coverage is provided and that any limitations or exclusions are clear. The primary purpose of insurance is to mitigate the financial impact of unexpected events that could result in significant losses. These events can include accidents, illnesses, property damage, theft, liability claims, and more. By purchasing insurance, individuals and businesses can transfer the financial risk associated with these events to the insurance company. In the event of a covered loss, the policyholder can file a claim with the insurance company, which will then provide compensation according to the terms and conditions of the policy.

The insurance industry refers to the collection of companies and entities that provide insurance products and services to individuals, businesses, and other entities. It plays a vital role in the global economy by helping individuals and organizations manage and mitigate various risks. The industry operates by offering a wide range of insurance policies that cater to different types of risks and uncertainties.

At micro level, insurance raises individual confidence and sense of assurance of financial reinstatement in case of loss. Ubom (2012) observed that the main objective of insurance is ensuring protection of customers against the insured risks. The social benefit of this is that jobs are sustained after major loss, losses of jobs and sources of income, inability to continue to produce social amenity, losing purchasing power are averted by the insurance reinstatement of the business after a major loss.

Also, premium from the insurance constitute a large segment of the capital market which may be difficult for an individual to produce. Thus insurance generate large fund to the capital market from the premium paid by all individuals insured. The importance of insurance cannot be overemphasized considering the role of the capital market to the economy. Insurance in the nonbanking sector provides additional capital to finance economic activities toward the desired growth. Arena (2006) asserted that insurance may contribute to the economic growth by channeling domestic saving into productive investments.

Every organization operates in an environment that is multidisciplinary, dynamic and complex; an indication that no business can operate in a vacuum. And theoretical literature appears to be unified in describing an environment as the totality of factors that affect, influence, or determine the operations or performance of a business. In other words, a business environment is the sum total of the physical and social forces and institutions that are relevant to the organizational goal setting and goal attainment, which are directly put into consideration by members of the organization when making business decision (Osuwagu, 2001). The last few years witnessed a number of unique systemic changes that are driven by globalization, technology and increased environmental awareness, in addition to what may be described as seismic shocks to the global economic system. This volatile nature of the environment calls for readjustment of organizations‘strategic management, primarily because volatility of the environment gives birth to risk and uncertainties, which is the very essence of the insurance mechanism. From this standpoint therefore, it becomes imperative for insurance firms in Nigeria to adopt an effective strategic management model that would facilitate their governance structure, business processes, and business information.

• Statement of the problem

In this time of harsh economic realities insurance companies are still struggling to find their feet as a major financial services sector in Nigeria. The perceived stagnant growth of insurance industry continues to be a key challenges that the country must overcome in order to encourage greater levels of investment.

In view of the fact that no modern economy can function effectively without an organized insurance industry, this insurance companies need to be innovative as their success will depend on their ability to devise new ways to approach insurance in Nigeria. Furthermore, the federal government, insurance companies, insurance professionals and all relevant agencies must ensure that they work together to ensure the insurance industry reaches it’s much publicized potential height which is obscure at the moment (Rensi & Carvalho, 2021). It is against this background that this study seeks to examine the problems of managing insurance companies in Nigeria with particular reference to National Insurance Commision (NAICOM).

• Objectives of the Study

The main purpose of the study is to examine the problems of managing insurance companies in Nigeria. The specific objectives are:

1. To evaluate the problems of managing insurance companies in Nigeria.
2. To examine the possible actions required to sort the problems of managing insurance companies.
   • Research Questions

The following research question are formulated to guide the study:

1. What are the problems of managing insurance companies in Nigeria?
2. What are the possible actions required to sort the problem of managing insurance companies?
   • Statement of Hypotheses

H₀₁: There is no significant relationship between problems of managing insurance companies in Nigeria

H₀₂: There is no significant relationship between the possible actions required to sort the problems of managing insurance companies.

• Scope of the Study

The study will focus on the problems of managing insurance companies in Nigeria. Primary data will be used for the study. Data will be collected through the distribution of questionnaires.

• Significance of the Study

The study will add to existing empirical data and also guide researchers carrying out similar studies.

Pages:  75

Category: Project

Format:  Word & PDF               

Chapters: 1-5                                          

Source: Imsuinfo

Material contains Table of Content, Abstract and References.