INSURANCE INDUSTRY AND RISK MANAGEMENT IN NIGERIA
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INSURANCE INDUSTRY AND RISK MANAGEMENT IN NIGERIA
ABSTRACT OF THE NIGERIAN INSURANCE INDUSTRY AND RISK MANAGEMENT
This study examined Nigeria’s insurance market and risk management practises (using NICON Insurance Corporation as a case study).
It aims to X-ray the fundamental issues connected to risk management’s adjustability and flexibility.
Evaluation of all pure risk exposures, whether they are insurable or not, and method development are the core components of risk management.
CHAPTER ONE OF THE NIGERIAN INSURANCE INDUSTRY AND RISK MANAGEMENT
1.0 INTRODUCTION
1.1 GENERAL OVERVIEW
Uncertainty about the future is a significant factor that typically adds a risk element to any commercial transaction. Any concern that involves risk simply implies that a certain loss will occur if the risky occurrence occurs. Generally speaking, an insurance contract occurs.
In general, an insurance contract is a legal agreement whereby one party, the insurer, agrees to pay a specific amount of money to the other party, the insured or assured, upon the occurrence of the specific event covered against in exchange for payment of a premium.
In other words, insurance is a risk-transfer mechanism through which a person or corporate entity transfers some or all of the uncertainty they encounter in their daily activities to insurers in exchange for the payment of an agreed-upon sum called a premium, which is typically very small compared to the potential loss.
The impact is continuity in life without setback or typically caused by insurable danger or peril, according to the insuring public and potential customers.
Insurance businesses offer the economic participants a service of financial support. They achieve this by providing financial protection for competing businesses in the unfortunate case of an insurable risk.
Many businesses would have failed if the insurance industry had not provided such financial support. Any country’s economic growth is directly influenced by how its citizens behave in terms of how much they save and how they spend the money they earn.
1.2 STATEMENT OF THE PROBLEM
The insurance sector, like all other insurance organisations, cannot survive without encountering some limitations, but it is extremely important to the growth and development of every economy. Among these issues are some.
• Lack of knowledge of the insurance industry’s actions.
• The refusal of insurance providers to settle only claims.
• Unqualified salespeople, agents, and other canvassers for insurance.
• The existence of phoney, fraudulent, and sporadic insurance firms.
There are insurance businesses in the nation that meet the needs of the required organisations but yet fall short in terms of management, technical, and financial capabilities. to name just a few.
1.3 OBJECTIVE OF THE STUDY
The study is focused on analysing the functions that insurance companies perform in Nigeria’s economy. Its objectives are the following.
a. To assess Nigeria’s progress towards economic development.
b. To determine the potential reasons working against the insurance industry’s goal being effectively pursued.
c. To suggest remedies for the issues that have been recognised, etc.
1.4 HYPOTHESIS
Ho: The insurance business can organise its subrogation.
Ho: The insurance sector cannot plan for their subrogation.
Risk deregulation may destroy the insurance business, according to Hypothesis II Ho.
Risk deregulation cannot destroy the insurance sector, I repeat.
1.5 RELATIONSHIP TO OTHER STUDIES
The Nigerian public, especially insurance students, will find this study to be of the utmost importance because it will help them better comprehend insurance’s concepts, practises, and necessity.
Additionally, it will assist in eradicating the prejudice that the public already has about the insurance sector and how it operates.
This study sheds light on the gleaning issues plaguing the operations of the Nigerian insurance sector and goes on to discuss potential solutions.
The insurance would be able to identify the areas that needed improvement and the best approach(es) to take to deal with the difficulties as they were being expressed.
1.6 SCOPE OF THE STUDY
This paper uses NICON Insurance Corporation as a case study to examine insurance and risk management in Nigeria.
1.7 LIMITATIONS
During the course of conducting the investigation, the researcher ran into a few issues, including the following:
• A lack of materials that adequately address current occasions and events. The majority of the materials were out of date.
• The lack of funding for the research nearly hampered the work.
• Time constraint: Not enough time was available to conduct adequate research for the project.
1.8 DEFINITION OF TERMS
Some of the terms used have been thoroughly described in order to make the job simple for any user to grasp, including:
The party protected by the insurance policy is the ASSURED.
• ASSURER: The insurance provider providing the policyholder with insurance coverage.
• BROKER: A person who seeks out and negotiates insurance contacts on behalf of the insured in exchange for payment.
• CLAIM: A request for payment made by the insured under his policy.
• COVER: The defence offered by insurance.
• CONTRACT: An agreement that gives birth to enforceable rights and obligations between the contracting parties.
• DECLARATION: Informational statements about the insured risk.
• INSURANCE POLICY: A formal agreement between a policyholder and the insurer.
• LOSS: The diminution or disappointment of value is a form of loss.
• RISK: An occurrence or scenario where the likelihood of an outcome can be calculated.
• RISK AVOIDANCE: To leave or leave behind a risk.
• WARRANTY: A clause in the policy describing how the contract policy is structured.
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