CHAPTER ONE: INTRODUCTION
1.1 BACKGROUND TO THE STUDY
Life is full of risk
and every human being is confronted with possibility that one day one of these
hazards which form part of life may befall them because one financial loss or
the other. The purpose of insurance is to indemnify the victims for the financial
loss they might have suffered as a result of these risks. Risk is a concept that denotes a potential negative
impact to an asset or some characteristic of value that may arise from some
present process or future event. In everyday usage,
"risk" is often used synonymously with the probability of a known loss.
Paradoxically, a probable loss can be uncertain and relative in an individual
event while having a certainty in the aggregate of multiple events (see risk
vs. uncertainty below). Risk is the possibility of an event occurring that will
have an impact on the achievement of objectives. Risk is measured in terms of impact
and likelihood.
Insurance was not set out to climate and cannot
soften the blow in a purely financial sense of obtaining monetary compensation
to the victims thereby placing them in a financial position.
The purchasing of an insurance has been earlier
describe as the insured person as a policy holder in order to protect himself
against a particular risk, take out a policy with an insured, thereby passing
over the risks to the insured on a payment of a fee known as premium.
Life is associated with different kind of risk some
of this risk are insurable while some are not. The insurance industry in each
devices different type of insurance policy to
carter for each one to
the insurance risk. life, aviation, motor, person, accident and a lot of
others.
Insurance as an industry did not exist in Nigeria
until the later part of the twentieth century. However, there existed in
Nigerian communities, some form of organize mutual social insurance schemes
which had the future of modern insurance.
Apart from the early social insurance scheme,
insurance as an industry is relatively new in Nigeria. The first operation
branch of an insurance company was open in Nigeria in Lagos in 1921 by the
Royal exchange assurance Plc. and it remain the only insurance company in Nigeria
until 1949 when three British owned insurance companies were opened up.
As at the time Nigeria got her independent operating
insurance as risen to twenty five and were mainly foreign owned. The insurance
degree was prorogated to regulate the way previous legislation did not do.
The insurance company
In Nigeria and the insurance industry are control by the federal ministry of
finance another offices of director of insurance. The insurance departments of
these ministries are responsible for the control activities of insurance
companies so as to ensure compliance electrets of 1976 and other relevant
regulation related to the business of insurance in Nigeria.
Royal Exchange assurance Plc. engage themselves in
the following types of risk, they are;- loss of profit following the insurance
personal inability, trained insurance, private can insure motor cycle group,
house holders comprehensive insurance and all kind of risk.
Royal Exchange Insurance Nig. Plc. as many branches
within Nigeria with the head office in Lagos and the incorporation number 6572
and the degree number that symbols Royal Exchange insurance his degree 58 of
1920.
Owing to the negative
factions surrounding the insurance industry in Nigeria, the activities of the
industry have been subjected to various criticisms of those negative factions.
We can identify good number of problems. Therefore, the statement of this
problem of this study could be obtained based on the observation and critical
analysis of the industry. Non payments of claims in the industry have become a
faction that negatives the performance of the industry. Despite the factor,
insurance company collect premium from their clients.
Another is the issue of inadequate capital and
investment to put the company in a more favorable condition to meet their
demand of their clients.
Often business organization in the country that rely
on the insurance companies realize they are in the case were they incurred
losses which have been insured barely affect the business.
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