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ROLE OF INSURANCE COMPANIES IN THE ECONOMIC DEVELOPMENT OF NIGERIA

CHAPTER ONE

INTRODUCTION

1.1    BACKGROUND OF THE STUDY
In a subsistence economy where man produces all what he consumes, it is possible to go without the generally accepted pattern of exchange relationship. In these subsistence situations, production is theoretically equal to income or savings equal to investment. As man’s needs and wants expanded, there comes the need of satisfy those wants which people had, but they were unable themselves to produce. This is done through exchange relationship known as BARTER.
A financial system is a conglomerate of various institutions, markets, instruments and operators that interact within an economy to provide financial services, such services may include resources mobilization and allocation, financial intermediaries and facilitation of foreign exchange transaction tom enhance international trade among others.
The role of financial institution in the system is that they are intermediaries of channeling funds from those who wish to save to those wishing to borrow. The development of financial system is closely related to the economy within which it operates.

 

1.2    STATEMENT OF PROBLEM
Despite the establishment of Nigeria social Insurance Trust Fund (NSITF) and NICON, many employees of the private sector are yet to benefit from its operations.
Many are ignorant of the scheme existence, few employees who knew about the scheme’s existence and the role it suppose to play in providing social security to them have met with disappointment because  of the stringent measure adopted by the Nigeria Social Insurance Trust Fund (NSITF) and NICON in paying out claims to beneficiaries.
It is this problem that will motivate me to carry out this research in order to see how these problems can be solved so that every employees of the private sector who have contributed must have benefited from this scheme and the level of poverty be reduced and the economy will improve.

1.3    OBJECTIVES OF THE STUDY
This research work will have the following objectives:

  1. To find out the contribution of insurance companies in the development of Nigeria economy.
  2. To guide future researchers on this topic.
  3. To help the Insurance companies in its operations.
  4. To make recommendation when necessary on the efficient and effective operation of the scheme (NSITF, NICON).
  5. To find out the problems of non-banking, financial institution with regards to their policies, with a view to recommend solutions.
  6. To create awareness to some other employees or public about the existence and importance of pension fund as a sources of social security.

1.4    STATEMENT OF RESEARCH HYPOTHESIS
The research work tends to test the following hypotheses listed below
HO:    Insurance companies have no significant effect on the nation’s economic growth and development.
H1:     Insurance companies have significant effect on the nation’s economic growth and development.
1.5    SIGNIFICANCE OF THE STUDY
It is hoped that at the end of this study the following benefits could be achieved. It will benefit the millions of Nigerians who engaged in Insurance policies, it will also help in educating the incurred on the importance the insurance companies and how to insured their valuable items with the insurer. The essay is therefore, aimed as assessing the insurance as a non-monetary financial institution plays a role in the economic development of this country Nigeria.

1.6    LIMITATIONS OF THE STUDY
This research work will be limited to the non-banking institution with reference to pension funds and insurance companies. The reasons why this research work will cover non-banking financial institution, is that, their sources of funds, mode of operation, investment policies and beneficiaries differ from that of banking i.e. financial institution for examples commercial banks, development banks, and merchant banks.
As other areas of study, the researcher is faced with many problems in the cause of collecting data of the research. Hence, the problem are discussed below:

  1. Inability to obtain all the needed data from the Nigerian Social Insurance Trust Fund (NSITF) and National Insurance Corporation of Nigeria (NICON) i.e. the case study. This is because they consider given the information as exposure of secret.
  2. The constraint of time with in which the study has to be completed, thus, makes it difficult for the researcher to elaborate extensively on this research work. Because time delay in processing the data, the researcher is expected to write and forward his request formally, and before this data can be release, it has to be endorsed by many officer such endorsement will take a longer period of time, why because not all officer can be on sit.
  3. Another problem is the attitude of the respondent, some respondents were reluctant to interview while other may not return the question sent to them.
  4. Inadequate fund is another major constraint which will hinder the research is collecting data. For example transportation, cost of printing questionnaire, etc.

1.7    HISTORICAL BACKGROUND OF THE CASE STUDY
The Nigerian Social Insurance Trust Fund was established in 1994 the Scheme replaced the defunct National Provident Fund (NPF) and NICON, the Nigeria Social Insurance Trust Fund was established by the Federal Government of Nigeria for the protection of workers in the private sector of the economy against the loss of employment, income as a result of old age invalidity or death.
The Scheme was established by Decree No. 13 of 1993 and it is mandatory for employers in the private sector. Failure to abide by the provision of the Decree is considered a criminal offence and it may tend to legal prosecution of offending organisation. The Board of the NSITF is no doubt the functional type and it is dominated by ex-parts and professional. The Board is headed by a Chairman appointment by the government and other members. The organisation consists of twenty-five (25) management staff, four (4) Executive Directors (MD).

This organisation is divided into four (4) Departments:
Administration and Finance Department
Investment Department
Treasury Department
Data and Training Department

The organisation is divided into zonal, state and district offices in order to decentralized operational levels aimed at de-bureaucratization of the organisation.
The National Insurance Corporation of Nigeria (NICON) was established in 1969. the NICON was accepted by the Federal Government of Nigeria of Dr. Reichel’s recommendations, the government promulgated Decree 22 of 1969 called the NICON, Decree which gave birth to the National Insurance Corporation of Nigeria (NICON).
The NICON Insurance Plc founded on 1st July 1969 that gave birth to the NICON, in effect, some of the landmark events which finally directly led to the formation of NICON were Mr. Oke’s letter of 1967, Honourable Obande Committee of 1964, Justice Adefarasin Commission of Inquiry of 1966 and Mr. Ani Working Party of 1966.
The NICON Insurance Plc has grown into the biggest, most outstanding and most reliable Insurance company in the country and possibly on the African continent, with a reputation based on service and performance. The insurance giant handles all classes of insurance; worthy of note are specialized areas as aviation, oil and marine and the special products such as the police welfare scheme and the NICON-NERFUND Scheme which provides a strong backing for the Nigerian industrialists.
This NICON has the following management hierarchy, Chairman, managing Director and three (3) executive Director, Administration and Finance Department, Special Risk Department, Technical Executive and assistant Managing Directors.

TABLE OF CONTENT:

 

CHAPTER ONE

INTRODUCTION

1.1     Background of the Study

1.2     Statement of the Research Problem

1.3     Objectives of the Study

1.4     Significance of the Study

1.5     Research Questions

1.6     Research Hypothesis

1.7     Conceptual and Operational Definition

1.8     Assumptions

1.9     Limitations of the Study

 

CHAPTER TWO

LITERATURE REVIEW

2.1     Sources of Literature

2.2     The Review

2.3     Summary of Literature Review

 

CHAPTER THREE

RESEARCH METHODOLOGY

3.1     Research Method

3.2     Research Design

3.3     Research Sample

3.4     Measuring Instrument

3.5     Data Collection

3.6     Data Analysis

3.7     Expected Result

CHAPTER FOUR

DATA ANALYSIS AND RESULTS

4.1     Data Analysis

4.2     Results

4.3     Discussion

CHAPTER FIVE

SUMMARY AND RECOMMENDATIONS

5.1     Summary

5.2     Recommendations for Further Study

Bibliography

 

 

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