(A CASE STUDY OF NAICOM)
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ABSTRACT
This study is an empirical investigation on the appraisal of the role of supervising bodies in the Nigeria insurance industry (NAICOM).
To ensure the comprehensiveness of this work, opinions of different authors were reviewed and other information was collected through questionnaires. To guide the conduct of the work, a total of sixty five (65) questionnaires were administered among the staff and management of NAICOM out of which only fifty (50) questionnaires were successfully completed and returned. To test the validity of the data so collected, relevant hypothesis were formulated and the Pearson product moment correlation coefficient and student T-test in analyzing it. Based on this testing, it was concluded that there is significant impact of the role of supervisory bodies in Nigeria insurance industry.
Based on the findings the following recommendations were made that the government should invest more on the national insurance commission in other to enhance the operation of insurance in the country.
CHAPTER ONE
1.1 BACKGROUND OF THE STUDY
In every sector of an Economy, certain bodies play critical roles in the operation and performance of the sector in the Economy of a Nation.
The principal sectors or institutions in a country like Nigeria include: Banking, Insurance, Aviation, petroleum, Education etc. But in this scope of study, we shall lay our emphasis n Insurance as a subject matter and the supervisory bodies that ensure the smooth and healthy operation of insurance business in Nigeria (a case study of NAICOM).
Insurance as we know encompasses the risk of every other sector, providing a platform by which other sectors flourishes with little or no worries of an uncertain occurrence of a hazardous event that may cripple the flow of the institution.
With this, it will be reasonable enough to say that insurance occupiers a delicate position in the economy and at such should be strictly supervised and monitored for maximum and effective operation.
Irono and Akaji (2003) defined insurance as a device whereby people with similar risk exposure come together for a small sum called premium in substitution for a large but uncertain sum in such a way that the few of them who suffer losses are compensated by many that escape losses.
The above definition shows that insurance operates on the basis of large number, it pointed out that in collecting relating same premium from many individuals in the economy, insurers are able to pull together like no other institution a large pool of fund that could be invested for short or long term periods.
From providing coverage to human life and physical assets to enabling effective allocation of economic resources to facilitating investment in infrastructure and high risk return activities by helping to measure and manage the exposure, and constituting a major investment block, providing investable funds to both equity and debt market, insurance is no drought a leading indicator of economic growth and at such the federal government in the strive to make our economic stronger has put in place necessary machinery to revive and repositions the industry and one of which is the National Insurance Commission (NAICOM) Charged with the responsibility of ensuring the effective administration, supervision, regulation and control of insurance business in Nigeria.
- Establish standards for the conduct of insurance business in Nigeria.
- Approve rates of commission to be paid in respect of all classes of insurance business.
- Approve refers of insurance premium to paid in respect of all class of insurance business etc.
These and many more are the responsibilities that have been saddled to the National Insurance Commission (NAICOM) by the federal government of Nigeria for the effective functioning of the sector.
1.2 STATEMENT OF THE PROBLEM
One of the major problem of Nigeria economy have been poor supervision and bad governance most especially in the 1990’s military rule in Nigeria, as has been the case in most other countries with prolong military rule which led to economic and social stagnation and decline.
However, recruitment of unqualified manpower into the institution has contributed to the poor performance of the industry and its growth at large.
Another notable challenge is the poor and negative attitude of the public towards insurance business which has hampers the growth of the industry.
1.3 PURPOSE OF THE STUDY
There is no project without a purpose, Asika (2001). The basic objective of this study is
- To assess the roles of supervisory bodies in the Nigerian insurance industry (a case study of NAICOM)
- To further point out the set back caused as a result of the ineffective supervision of the insurance industry.
- To identify practical measures to take in other to correct such problem.
1.4 SIGNIFICANCE OF THE STUDY
This study will be particularly important to student of insurance and risk management Ken Saro-Wiwa Polytechnic, Bori and other sister institutions of higher learning in the country.
Also it will serve as a medium of appraisal for the National Insurance Commission (NAICOM), whether or not it’s aim have been furthermore provide an enabling environment for swift operation of insurance business in Nigeria.
1.5 SCOPE OF THE STUDY
This study is very wild in scope though its coverage is to be limited to the role of supervisory bodies in Nigeria Insurance business as related to the National Insurance Commission (NAICOM).
1.6 RESEARCH QUESTION
The following research questions were provided in the course of the study.
- What are supervisory bodies?
2.What are the roles of supervisory bodies to Insurance?
- What is the importance of supervisory bodies to the growth of the country economy?
- What are the effects of (NAICOM) to Insurance as an institution?
1.7 RESEARCH HYPOTHESIS
The following set of hypothesis was provided for the effective execution of this project work.
Ho: There is no significant role of supervisory bodies in the Nigeria Insurance Industry.
Hi: There is a significant role of supervisory bodies in the Nigeria Insurance Industry.
1.8 LIMITATION OF THE STUDY
One of the factors that hindered the effectiveness of the project is lack of adequate time. It was always sharing relative scarce time between the study exercise and academic engagement. Also lack of enormous fund did not allow a nation-wide coverage thereby limiting the study to only the National Insurance Commission (NAICOM).
1.9 DEFINITION OF TERMS
The following definitions were provided for the effective understanding of some of the term used in course of this research work.
SUPERVISION: The act of supervisory someone or an organization.
HAZARDOUS EVENT: An event that is likely to bring about a harmful result.
INVESTMENT FUND: Funds meant for investment
EQUITY OWNERSHIP: Especially in terms of net monetary
Value of some business or stock market.
NAICOM: National Insurance Commission which was established by military decree on January 10, 1997 to ensure the effective administration, supervision, regulation and control of insurance business of Nigeria.
INSURANCE MARKET: This institutionalized arrangement for bringing together people who have the need to transfer their risks subject to certain terms and conditions.
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