Project Abstract

Project Overview

<p> </p><p><b>INTRODUCTION<br></b></p><p><b>1.1 &nbsp; &nbsp; <br></b><b>Background<br>of the study</b></p><p>The<br>insurance industry is a highly specialized industry that gives greater security<br>to the fortunes of common people and among the whole society. It is one of the<br>financial institutions in Nigeria today that aid economic development and<br>growth. Egeria (1996:5) describes insurance as handmade of commerce which plays<br>a vital role in the going concern of humans as an economic animal. Chikeleze<br>and Echekoba (2008:186), defined insurance as a contract whereby one party,<br>called the insurer, in return for a consideration, called the premium,<br>undertakes to pay the other party, called the insured a sum of money or its<br>equivalent in kind upon the happening of specified event that is contrary to<br>the interest of the insured. The modern insurance business was introduced into<br>Nigeria in the late 20th century by the British merchant, who established<br>trading posts on the west coast of Africa. Before the Advent of the European to<br>Nigeria, organizations similar in purpose to insurance company were in<br>existence known as traditional social insurance scheme. They include the Isusu,<br>Social clubs, Age grade, etc, According to Okonkwo (1998:6), the first<br>insurance company to register its presence in Nigeria was Royal Exchange<br>Assurance with its office in Lagos in 1921. The enactment of workman<br>compensation ordinance in 1942 and the Road traffic Act of 1945 both<br>contributed to the meaningful takeoff of insurance industry in Nigeria. The<br>need for control and timely intervention of government led to the formation of<br>the National Insurance Corporation of Nigeria (NICON). In 1986, because of the<br>Structural Adjustment Program (SAP) brought about the emergence and<br>proliferation of financial institution especially Deposit taking institution<br>and insurance companies. Insurance capital base was raised from N1-N2million<br>then. Fallout from this event was that only 57 out of 152 insurance companies<br>qualified for registration. This was coupled with tighter control over the<br>industry.The importance of insurance in modern economies is unquestioned and has<br>been recognized for centuries. Insurance “is practically a necessity to<br>business activity and enterprise.” But insurance also serves a broad public<br>interest far beyond its role in business affairs and its protection of a large<br>part of the country’s wealth. It is the essential means by which the “disaster<br>to an individual is shared by many, the disaster to a community shared by other<br>communities; great catastrophes are thereby lessened, and, it may be,<br>repaired.” Insurance is an essential element in the operation of sophisticated<br>national economies throughout the world today. Without insurance coverage, the<br>private commercial sector would be unable to function. Insurance enables<br>businesses to operate in a cost-effective manner by providing risk transfer mechanisms<br>whereby risks associated with business activities are assumed by third parties.<br>It allows businesses to take on credit that otherwise would be unavailable from<br>banks and other credit-providers fearful of losing their capital without such<br>protection, and it provides protection against the business risks of expanding<br>into unfamiliar territory – new locations, products or services – which is<br>critical for encouraging risk taking and creating and ensuring economic growth.<br>Beyond the commercial world, insurance is vital to individuals. Lack of<br>insurance coverage would leave individuals and families without protection from<br>the uncertainties of everyday life. Life, health, property and other insurance<br>coverage’s are essential to the financial stability, well-being and peace of<br>mind of the average person. Insurance is a financial product that legally binds<br>the insurance company to pay losses of the policyholder when a specific event<br>occurs. The insurer accepts the risk that the event will occur in exchange for<br>a fee, the premium. The insurer, in turn, may pass on some of that risk to<br>other insurers or reinsurers. Insurance makes possible ventures that would<br>otherwise be prohibitively expensive if one party had to absorb all the risk.<br>Advancements in medicine, product development, space exploration and technology<br>all have become a reality because of insurance.Insurance intermediaries<br>facilitate the placement and purchase of insurance, and provide services to<br>insurance companies and consumers that complement the insurance placement<br>process. Traditionally, insurance intermediaries have been categorized as<br>either insurance agents, insurance middle man or insurance brokers. The<br>distinction between the two relates to the manner in which they function in the<br>marketplace.Insurance agents are, in general, licensed to conduct business on<br>behalf of insurance companies. Agents represent the insurer in the insurance<br>process and usually operate under the terms of an agency agreement with the<br>insurer. The insurer-agent relationship can take a number of different forms.<br>In some markets, agents are “independent” and work with more than one insurance<br>company (usually a small number of companies); in others, agents operate<br>exclusively – either representing a single insurance company in one geographic<br>area or selling a single line of business for each of several companies. Agents<br>can operate in many different forms – independent, exclusive, insurer-employed<br>and self-employed.</p><p><b>1.2 &nbsp; &nbsp; <br></b><b>STATEMENT<br>OF THE PROBLEM</b></p><p>Insurance<br>industry is generally seen as the backbone of any country‘s risk management<br>system, since it ensures financial security, serves as an important component<br>in the financial intermediation chain, and offers a ready source of long term<br>capital for infrastructural projects. Omar (2005) argues that the insurance<br>industry mitigates the impacts of risks and positively correlates to growth as<br>entrepreneurs cover their exposures, otherwise risk-taking abilities are<br>hampered. Insurance also promotes the growth of small-scale and large-scale<br>firms as it provides stability by allowing large and small businesses operate<br>with a lesser risk of volatility or failure. Insurance is also very important<br>to the financial system. In collecting relatively small premium from the<br>insured in the economy, insurers are able to pull together large funds that<br>could be invested for short and long term periods (Obasi, 2010). Such long-term<br>funding of the economy is very critical for economic growth, and the deepening<br>and broadening of the domestic financial system. Amidst the tremendous benefit<br>of insurance policy, most firm or individuals would not have been able to tap<br>into the stream of services offered by these insurance company without the<br>services of the insurance middle man. It is on this backdrop that the researcher<br>intends to investigate the role of insurance middle man in the growth and<br>development of insurance business in Nigeria. </p><p><b>1.3 &nbsp; &nbsp; <br></b><b>OBJECTIVE<br>OF THE STUDY</b></p><p>The<br>main objective of this study is to investigate the role of insurance middle-man<br>in the growth and development of insurance business; specific objective are:</p><p>i) &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<br>To investigate the role of insurance<br>middle-man in the growth of insurance business</p><p>ii) &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<br>To ascertain the relationship between<br>insurance middle-man and the growth of insurance company</p><p>iii) &nbsp; &nbsp; &nbsp; &nbsp; <br>To ascertain the relationship between<br>insurance middle-man and the policy holder/insured</p><p>iv) &nbsp; &nbsp; &nbsp; &nbsp;<br>To proffer suggested solution to the<br>identified problem</p><p><b>1.4 &nbsp; &nbsp; <br></b><b>RESEARCH<br>HYPOTHESES</b></p><p>To<br>aid the completion of this study, the following hypotheses were formulated by<br>the researcher:</p><p><b>H0:</b>insurance<br>middle-man does not play any significant role in the growth of insurance<br>business</p><p><b>H1:</b>insurance<br>middle-man does play a significant role in the growth of insurance business</p><p><b>H02:</b>there<br>is no significant relationship between insurance middle-man and the growth of<br>insurance business</p><p><b>H2:</b>there<br>is a significant relationship between insurance middle-man and the growth of<br>insurance business</p><p><b>1.5 &nbsp; &nbsp; <br></b><b>SIGNIFICANCE<br>OF THE STUDY</b></p><p>It<br>is believed that at the completion of the study, the findings will be of great<br>importance to the management of insurance company as the study seek to<br>enumerate the importance of insurance middle-man in the growth of insurance<br>business in Nigeria, the study will also be of benefit to the insurance<br>middle-men as the study seek to enumerate their role in risk management and<br>their importance to the policy holders. The study will also be of great<br>importance to researchers who intend to embark on a study in a similar topic as<br>the findings and literature in the study will serve as a reference point. Finally the study will be useful to teachers,<br>students, academia’s researcher and the general public.</p><p><b>1.6 &nbsp; &nbsp; <br></b><b>SCOPE<br>AND LIMITATION OF THE STUDY</b></p><p>The<br>scope of the study covers the role of insurance middle-man in the growth and<br>development of insurance business, but in the cause of the study, there were<br>some factors which limited the scope of the study;</p><p><b>AVAILABILITY OF RESEARCH MATERIAL:</b><br>The research material available to the researcher is insufficient, thereby<br>limiting the study &nbsp; &nbsp; &nbsp; </p><p><b>TIME:</b>&nbsp;The time frame<br>allocated to the study does not enhance wider coverage as the researcher has to<br>combine other academic activities and examinations with the study.</p><p><b>FINANCE:</b><br>The finance available for the research work does not allow for wider coverage<br>as resources are very limited as the researcher has other academic bills to<br>cover</p><p><b>1.7 &nbsp; &nbsp; <br></b><b>DEFINITION<br>OF TERMS</b></p><p><b>Insurance agent</b></p><p>Insurance<br>agents are, in general, licensed to conduct business on behalf of insurance<br>companies. Agents represent the insurer in the insurance process and usually<br>operate under the terms of an agency agreement with the insurer.</p><p><b>Insurance Brokers</b></p><p>Insurance<br>brokers typically work for the policyholder in the insurance process and act<br>independently in relation to insurers. Brokers assist clients in the choice of<br>their insurance by presenting them with alternatives in terms of insurers and<br>products</p><p><b>Insurance</b></p><p>Insurance is a means of<br>protection from financial loss. It is a form of risk management primarily<br>used to hedge against the risk of a contingent,<br>uncertain loss</p><p><b><br>Middle-man</b></p><p>An<br>intermediary or agent between two parties; especiallya dealer, agent, or company intermediate between the<br>producer of goods and the retailer or consumer.</p><p><b>1.8 &nbsp; &nbsp; <br></b><b>ORGANIZATION<br>OF THE STUDY</b></p><p>This<br>research work is organized in five chapters, for easy understanding, as follows<br>Chapter one is concern with the introduction, which consist of the (overview,<br>of the study), statement of problem, objectives of the study, research<br>question, significance or the study, research methodology, definition of terms<br>and historical background of the study. Chapter two highlight the theoretical<br>framework on which the study its based, thus the review of related literature.<br>Chapter three deals on the research design and methodology adopted in the<br>study. Chapter four concentrate on the data collection and analysis and<br>presentation of finding. Chapter five<br>gives summary, conclusion, and recommendations made of the study.</p> <br><p></p>