AN ASSESSMENT
OF ADEQUATE RISK RECOGNITION AND MANAGEMENT IN NIGERIAN INSURANCE COMPANIES
(A case study of Leadway Assurance Company. Plc. Kaduna
TABLE OF CONTENTS
Title
page – – – – – – – – – – i
Declaration – – – – – – – – – – ii
Approval
page – – – – – – – – – iii
Dedication – – – – – – – – – – iv
Acknowledgement – – – – – – – – – vi
Abstract
– – – – – – – – – – viii
Table
of contents – – – – – – – – – ix
Chapter one: Introduction
1.0
Background of the study – – – – – – – 1
1.1
Statement of the problem – – — – – – 4
1.2
Formulation of hypothesis – – – – – – 5
1.3
Scope of the study – – – – – – – – 5
1.4
Significance of the study – – – – – – – 6
1.5
Historical background of
the case study – – – – 6
1.6
Definition of terms – – – – – – – – 8
CHAPTER TWO:LITERATURE
REVIEW
2.0 Overview – – – – – – – – – 10
2.1 Concepts of Risk – – – – – – – 10
2.2 Types of risk – – – – – – – – 11
2.3 Source of risk – – – – – – – – 13
2.4 Risk Identification – – – – – – – – 14
2.5 Risk Evaluation – – – – – – – – 15
2.6 Risk Treatment – – – – – – – – 16
2.7 Management of risk – – – – – – – 17
2.8 The Value of risk Management – – – – – – 18
2.9 Insurance and risk management techniques – – – 19
2.10 The Nigerian insurance industry – – – – – 20
2.11 Insurance regulation – – – – – – – 21
CHAPTER THREE: RESEARCH
METHOLOGY
3.0 Overview –
– – – – – – – – 25
3.1 Population – – – – – – – – – 25
3.2 Sampling technique – – – – – – 25
3.3 Method of data collection – – – – – – 26
3.4 Research techniques and analytical tools
for testing of hypothesis 27
CHAPTER FOUR: Data
presentation and analysis
4.0 Overview – – – – – – – – – 28
4.1 Presentation of data base on questionnaire – – – – 28
4.2 Data analysis – – – – – – – – 30
4.3 Testing of hypothesis – – – – – – – 38
4.4 Research findings – – – – – – – – 39
CHAPTER FIVE: Summary of
findings, conclusion and recommendations
5.0 Overview – – – – – – – – – 40
5.1 Summary – – – – – – – – – 40
5.2 Conclusion – – – – – – – – – 41
5.3 Recommendations – – – – – – – – 42
References – – – – – – – – – 44
Appendix – – – – – – – – – 46
CHAPTER
ONE
INTRODUCTION
1.0 BACKGROUND OF THE STUDY
Insurance is a security
device used by the inured to protect himself against a risk purchased from the
insure and the right to be indemnified if the risk should materialize. The
purchase price which the insured pays the insurer is known as the premium,
often paid on monthly or annually basis
and the insurer in return compensate the insured in event of loss.
THE DEVELOPMENT OF INSURANCWE INDUSTRY IN Nigeria begins in 1950 during the colonial era period
characterized by a market dominated by Europeans company which virtually held
the monopoly of insurance business over the continent of Africa. At that time
most Nigerians citizens are not aware of insurance and it importance. After
Nigeria independence in 1960 most of the industries managed by the Europeans
are been taken over by Nigerians. As they begin to managed those companies, the
awareness of insurance and it importance was known.
In the 1980, insurance
companies operating in Nigeria begins to grow in numbers and the need to
enlighten the citizens on insurance was carried out by some of the employee of
those companies. Who went to the street to educate they people on the danger of
risk that might occur in many ways, such as fire, theft, accident, rain storms
etc. and the responsibility of the insurance is to compensate the unfortunate
person who has suffered losses by placing him in the same position as he was
before. However, some people agreed to take up an insurance policy but the
number of those that patronize the company at that time was very few.
In Nigeria today, most
industries and commercial business have insurance cover. This is because
insurance ensure the growth and development of all industries and business
established and spread all over the country. Apart from business most people
don’t insure their houses, cars farms etc. they show reluctant attitude towards
taking up insurance policy for such assets and also think it’s a waste of
money. Giving great consideration to the above statement, the researcher is
compelled to carry out a research on the topic in question an assessment of
adequate risk recognition and management in Nigeria insurance companies. In
order to re-oriented the people toward changing their attitude and belief about
insurance industries.
1.1 STATEMENT
OF THE PROBLEM
The insurance industry over
the years has been going through a lot of problems, which hinders their
effectiveness and efficient rendering of services. These include.
– Lack of survey of risk transferred by the
insurance companies, as such risk are just assumed without properly
scrutinizing the situations and circumstance surrounding such risk.
– Lack of adequate claims settlement procedures
which are characterized with bureaucracy.
– Lack of proper fixed and computed premiums which
endangers the solvency and profitability of the insurance companies.
OBJECTIVES OF THE STUDY
The following are the
objectives of this study?
– To assess hoe insurance companies render their
services.
– To determine the effectiveness of how they handle
the risk that is being transferred to them.
– To encourage insurance companies to have financial
strength that will contain the risk of losses that they have agreed to assure.
1.2 FORMULATION
OF HYPOTHESIS
Null hypothesis (Ho(
insurance is not a security device used by the insured to protect himself
against a risk.
Alternative Hypothesis (H1)
insurance is a security device used by the insured to protect himself against a
risk.
1.3 SCOPE
OF THE STUDY
The scope of this study
will be based on risk recognition and management in the insurance industry with
specific interest on lead way assurance firm from 2008 to 2010.
1.4 SIGNIFICANCE
OF THE STUDY
1. The research write up will serve as a source of
data for subsequent project and research work.
2. The write up will also help in creating awareness
among the insuring public on the relevance and value of the services offered by
the insurance industry.
3. The research study shall be an immense reference
materials to students and other researchers who might want to expands the
research topic.
1.5 HISTORICAL
BACKGROUND OF THE CASE STUDY
Leadway Assurance company
limited was in corporate in 1970 as a limited liability company. The company
started it operation as a direct motor insurance company and further expanded
in the early 80’s to cover more risk.
The company’s remarkable
success has been possible as a result of its sound professional and business
standards backed by the uncompromising level of integrity of its Directors.
Such uncompromising level of integrity was instilled by it late founder sir
(DR) Hassan .O. Odukale as an honest businessman, the founding managing
Director sir Odukale nurtured the company to an eviable position in the Nigeria
insurance industry. Leadway is a private company with 28 share inventors and
trust corporation. The statutory deposit of leadway with the C.B.N as at 2002
stands at over 13.5 million being 15% of their statutory paid up capital as
provided by pre 2003 insurance act. This further affirms their position as a
full fledge composite insurance company under writing all classes of insurance
in Nigeria.
The company, however
announced it achievement of 5.5 billion capital base as at April 30, 32006
which implied that the company has already met the statutory of N5 billion
capitalizations for composite firms. The company authorized share capital has
raise from 2 billion to 4 billion in order to meet statutory requirements and
accommodate increasing need for higher capital structure. The increase as given
the company the necessary leeway to keep increase its paid up capital steadily
and also enable it to accommodate new investors.
1.6 DEFINITION
OF TERMS
– Proposal forms: This is a document that is drafted by the insurer
to seek answers to the main materials aspect of the risk that will be insured.
– Premium:This is an amount that the insured pays at every
month ort annually to the insurer
– Proximate Cause:It used to
determine whether the loss sustained by the insurer was cased by the risked
insured against.
– Cover:Protection provided by the insurance company to
the insured against a risk.
– Indemnity: This is process whereby the insurance company
compensates the insured in the event of loss.
– Insurer: An insurer is the insurance company who managed
risk that was insured.
– Re-Insurance:Is a process whereby the insurance transfer part of the risk it assumed
to another insurance company.