The Performance Of Motor Insurance Business On The Premium Income Of Insurance Company From The Year (2002-2014) In Nigeria

ABSTRACT

The study is on “The Performance of Motor Insurance Business on the Premium Income of Insurance Company from the Year (2002-2014) In Nigeria”. The study has three objectives and three research questions. Survey research design was used for the study.  A total of 70 questionnaires were distributed which resulted to a sample size of 60 which was determined using the Taro Yamanne formula. The population was 70 and the sample size was 60 undergraduate students who registered in Imo State University, Owerri Library.  In a bid to avoid bias judgment, the researcher adopted the simple random sampling techniques in which each possible sample composition has equal change of been chosen, questionnaires were administered and completed and returned from Nicon insurance plc. The findings show that Non-settlement of motor insurance claim promptly adversely affect the image of insurance companies. Effective underwriting of motor insurance proposer contribute to the profitability of motor insurance business in Nigeria. The study therefore recommended among others that The motor insurance cover, insurance certificate etc. that are issued by the insurance companies should obtain security codes or pin so as to make their proliferation by an authorized person and organizations impossible. The settlement of motor insurance claims which is 90 days in view of section 70(i) insurance act 2003 should be reduced to 60 days to make claim settlement faster. The federal government and state government should embark on the road in maintenance and expansion of the available road and bridges to avoid double parking which instigate the rate of loss when it occur especially fire loss.

CHAPTER ONE                                                            

INTRODUCTION

Insurance is a unique industry and one of the  contributing factors to its Uniqueness is the product of the insurer, that is, the promise of indemnity at a future date, is intangible, it has been generally accepted that the insurance Industry exists to guarantee the continued existence of other industries as an illustration. If a company/ factory that is destroyed insurer will indemnify the Insured   by repairing   or reinstating the factory thereby guaranteeing the continued existence of the factory Ojukwu   (2006).

Motor insurance as a portfolio is the easiest to develop and the commonest policy that can be sold to the prospective insurrects.  This has made motor insurance business a fertile ground where unauthorized persons and organization can operate through the proliferation of fake motor insurance documents such as motor cover notes, motor insurance certificates etc. proper underwriting, legislations, awareness, to eradicate the problems facing motor insurance portfolio is very vital.

More so since motor insurance is the envies and commonest policy that can be sold to the prospective insured, it has adversely affect positively on the profitability of insurance company and also contributed to the growth of insurance premium income of insurance company in Nigeria and the industry at large.

• BACKGROUND OF THE STUDY

The national insurance corporation of Nigeria “popularly known as Nicon” is an insurance company established through a military decree .22 in 1969.

The decree granted the company virtual monopoly in the insurance of government assets properly until insurance act 2003 repeated the monopoly. Through government legislation, NICON was able to dominate the insurance business by acquitting all government insurance business and about 10% income or premium, NICON was able to dominate services provided.

STATEMENT OF THE PROBLEM

In this chapter the researcher identified the following as the problem that affect motor insurance on the premium income of insurance company in Nigeria

1. The proliferation of fake motor insurance document such as motor cover notes and organizations reduces the revenue and profitability of motor insurance and premium income.
2. Non settlement of motor insurance claims promptly adversely affect the image of insurance companies thereby reducing premium income.
3. Dilapidated infrastructural facilities such as Bridges, Road etc. causes more accident which results to frequent claims thereby adversely affect motor insurance on premium income.
4. Global economic meltdown has reduced the purchasing power of the insuring public by making them to reduce their scope of cover to third party only and this reduce the premium income of the insurance industry.
5. The insurance poor vehicle motor maintenance culture is responsible for most accident and this invariable depletes the reserves of the insurance companies as a result of frequent claims.
6. Lack of uniform database of the insured
7. Vehicle gives latitude to the operations of the unauthorized persons and organization and this adversely impacts on the revenue of motor insurance income.
8. Ignorance of members of the public on motor insurance policy is responsible for the low patronage from the members of the public and this affect the profitability of motor insurance portfolio.
9. The death of professional qualified personnel’s is responsible for the operation of the authorized persons and organizations and this reduces the revenue or premium income of the insurance industry in Nigeria.
10. The legislations on motor insurance business are too numerous thereby causing some insured to resort to itself insurance and this invariably affect the insurance industry revenue.
11. Unethical practices such as rate cutting etc. is responsible for unhealthy competition in the industry and this reduce the revenue accrued to the insurance industry.
12. The state of insecurity in Nigeria results to more claims on motor portfolio and this adversely affects the reserves of the insurance companies.
13. Administrative cost is responsible for the high premium rate which reduces the public patronage thereby affecting the profitability of the insurance industry.
14. Inadequate compensation is responsible for the apathy of the insurance public toward insurance companies and it adversely affect the revenue of the insurance industry.

OBJECTIVE OF THE STUDY

The aim of this research is to extensively analyses literacy materials like Newspapers, journals, Notes, Textbook e.t.c. and regulations on insurance and establish the problems that affect motor insurance business in Nigeria as well as the performance or contribution of motor insurance on premium income of insurance business in Nigeria.

Other specific objectives are;

1. To ascertain the effect of motor insurance on the profitability of every insurance industry in Nigeria.
2. To know how Non-settlement of motor insurance claim promptly adversely affects the image of insurance companies.
3. To examine how effective underwriting of motor insurance prosper contribute to the profitability of motor insurance business in Nigeria.

RESEARCH QUESTION

1. To what extent does motor insurance affect the profitability of every insurance industry in Nigeria?
2. In what way does Non-settlement of motor insurance claims promptly adversely affects the image of insurance companies?How can we examine how effective underwriting of motor insurance prosper contribute to the profitability of motor insurance business in Nigeria.

STATEMENT OF HYPOTHESIS

• HYPOTHESIS I:

Ho: Non settlement of motor insurance claim promptly does not adversely affects the image of the insurance companies.

HI: Non- settlement of motor insurance claim promptly adversely affects the image of insurance companies.

HYPOTHESIS II: Effective underwriting of motor insurance prosper does not contribute to the profitability of motor insurance business in Nigeria.

1.6      SCOPE OF THE SUDY

The research work is intended to appraise the performance of motor insurance business on the premium income of insurance company from the year (2002-2014) in Nigeria, it will also discuss the factors affecting its performance and possible solutions and its contribution to the development of the Nigeria economy.

1.7      SIGNIFICANCE OF THE STUDY

The significance of this study cannot over-emphasized as to appraise the performance of motor insurance on premium income of insurance company in Nigeria. This research work will be of immense importance to both the insuring public, investors, and the underwriters and particular to the operation in the insurance industry, any fellow student, and the nation in general, they will become more informed as to the performance of motor insurance business on the premium income of insurance company in Nigeria.

To the insurance industry, it will use this findings in this study to amend or enhance these practice for greater performance and productivity in Nigeria. The regulatory authority will be informed of the damage of allowing non-insurance organization to collect and issue insurance cover for motor insurance (vehicle). The information will enable them to take step in the right direction. And finally to the general public, they will know the right and liability under motor insurance policy for those properties (vehicle or car).

1.8      LIMITATION OF THE STUDY

In carrying out this research various constraints were encountered and they include financial constraint, time and accessibility of data. But all the constraints, finance posed a greater constraint as the researcher had to always consult newspapers dailies and other important source to get information. The researcher selected Nicon insurance plc. as a case study.

1.9      DEFINITION OF TERMS

APPRAISAL: An estimate of quantity, quality or value. The process through which conclusions of property value are obtained; also refers to the report setting forth the estimate and conclusion of value.

PREMIUM: This is the consideration given by the insured in return for the insurers undertaking to cover the risk insured against in the policy assurance. R Norwich union fire insurance company (1916).

INSURANCE: A system for transferring the responsibility of paying for losses from one party to another. In other words a systematic plan for protection against economic losses. Nduka (2005).

MOTOR INSURANCE:

INCOME: Is the money insurance companies earn to or by working to serve other people.

UNDERWRITER: A responsible and knowledgeable official who is entrusted with the responsibility of deciding whether the risk presented to the company will be accepted and on what terms and rate of premium.

UNDERWRITING: The purpose of underwriting therefore is to assess the risk that is the scientific determination of the extent the risk presented for insurance depart from normal and what terms and rate of premium that apply (Ojulan 2006)

POLICY: The policy document evidencing the contract of insurance shall be delivered to the insured not later than 60 days after payment of the first premium. Section 15(1) insurance Act 2003.

CLAIM: A demand by the insured for an indemnity or benefit under a policy of insurance subject to a loss, injury damage or liability caused by an insured peril and is not excluded subject to the adequacy of the sum insured or limit of indemnity.

RESERVES: Reserve in negatively defined as not including an amount written off or retained by way of providing for depreciation renewals diminution in values of assets or retained by way of providing for the known liability or any sum set aside for the purposes of its being used to prevent undue fluctuation in charge for taxation.

SHARE PREMIUM: A share premium account will rise from the issue of ordinary share capital at a price which is above its normal value the difference is carried to the share capital.

SOLVENCY MARGIN: This is the difference between assets and the outstanding liabilities and shall not be less than 15% of the gross premium income less reinsurance premium paid out during the year or the maximum paid up capital whichever is greater for a non-life business.

EXCESS: Excess is the first part of any admissible claim to be borne by the insured with the insurer being responsible for the balance (Akmtayo 2001).

EX-GRATIA PAYMENT: Payment made on compassionate basis where the insurer feels that the insured may face hardship when payment of claim is repudiated.

TARIFF: The market minimum agreement on motor insurance business rating.

Pages:  44

Category: Project

Format:  Word & PDF        

Chapters: 1-5                                 

Material contains Table of Content, Abstract and References.