(A Study Of Union Assurance )
ABSTRACT
The nitty-gritty of this research work is, the challenges of marketing life assurance policies in rural areas (a study of Union Assurance). It becomes very necessary because of the pivotal role played by life assurance companies to the economy of the nation and the importance of life policy to the people in rural areas. The researcher adopted descriptive survey, questionnaire in the collection of data and frequency percentage table in analyzing the data. From the research carried out, the findings revealed that the lack of qualified and trained life assurance agent or broker is highly responsible for low patronage of life policies in rural areas which constitute a challenge to life assurance agent in marketing life assurance policies in rural areas. Also, the bad image of life assurance companies in regard to claim settlement which also constitute challenges in marketing life assurance policies in rural areas. Based on the findings and conclusions, it is therefore recommended that, life assurance companies should take into account the quality of staff. They employ considering the level of education attained and how vibrant they are in communicating with the prospective assured in the rural areas. Also, life assurance companies should try to fulfill their promise; that is payment of claims promptly which will enable them to dispel the bad perception of people and bad image created by their service providers and if this is often done it will go a long way in promoting the marketing life assurance policies in rural areas.
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND TO THE STUDY
In Nigeria the issue of taking life assurance has been neglected, in the sense that at this present time it is estimated that not up to two percent of Nigerians own life assurance policies, for this fact the benefits and roles life assurance plays in this country is being viewed from a very cooked point thereby making it slightly visible. Moreover the life assurance industry has entered an era of accelerated changes as a result of increased competition in products and pricing within all insurance sector hence professional marketing management is now pre-requisite if a company is to return or advance its position in the competition hierarchy.
Research has shown that the problem encountered by the marketers (intermediaries) of life assurance in rural areas have an impacts on the growth of insurance level and our society. There is a wide spread of lack of understanding of what benefit it is to the society. Research has also shown that there is a significant relationship between the extent to which one understands and the importance one attaches to life assurance policies or insurance service or product. The more clear and understandable one find life assurance services to be the more likely it is that the challenges of life assurance policies in a rural areas can be easily solved this shows that low level of literacy constitutes to the challenges encountered by insurances intermediaries in marketing of life assurance policies in rural areas.
Marketing of life assurance policies in rural areas involves the social and managerial processes through which financial institution (i.e insurance companies) create and attempt to satisfy the various financial needs of their customers by offering them different financial products and service at the capital and money markets it is also seen to be a system of business activities designed to plan (product). Price process, promote, distribute (place) and showing physical evidence or something of value that is essentially intangible that does not result in the owners hip of anything to the benefit of the definition of Ekwuaner (2001:2).
Moreover, insurance business in rural areas is a service oriented activity that does not follow exactly what is obtained in real physical product services marketing, it is a concept that deals with economic consequences of transferring risk, and therefore buying life assurance policy protection constitutes an in portent element in risk management. Insurance performed under a legal contract, upon which the assurer promises to reimburse the assured in the case of occurrence of accidental losses specified in the policy or contract insurance implied according to Egbuta (2007) an agreement between the assured who pays the premium and the assurer for financial loss incurred for the specified risks life assurance is a peculiar insurance product that has an inherent element of investment in addition to providing cover to the assured for accidental or natural death unlike the other type of policies that benefit the policyholder only when there is a disaster life assurance is a product that encourage policy holders to save over an agreed period of time such that certain benefits can be earned prior to now life assurance only entailed the paying of premium throughout the life damage or the policyholder. Then the realization of the sum assured was only contingent on the damage or death of the assured. This aspect of life assurance has been revisited by the industry. Agreed benefits can now be enjoyed on the maturity of the policy or on the death of the assured whichever comes first. Inevitably it has become an investment interested in those products which help to build wealth and provide retirement income. This is necessary for a demand of life assurance products such as individual whole life and term will remain popular, sale of products like single premium investment linked retirement products variable life and annuity product are on the incline. Insurance companies will have to constantly innovate in terms of product development to meet ever changing consumer needs. In the competitive global market, the main focus of life assurance would be on customer satisfaction, quality advice, product choice with the policy servicing and claim settlement and service should focus on enhancing the customer experience and maximizing customer convenience. An entity which provides assurance is known as an assurer in insurance company, or insurance carrier. A person or entity who buys insurance is known as an assured or policy holder. The insurance transaction involves the assured assuming a guaranteed and known relatively small loss in the form of payment to the assurer in exchange for the assurers promise to compensate the assured in the event of a covered loss. The loss may or may not be financial but it must be reducible to financial terms and must involve something in which the assured has an insurable interest established by ownership, possession, or preexisting relationship. According to (Jack 2003) life assurance is a contract between policy holder and assurer when the assurer agrees to pay a sum of money (benefit) upon the occurrence of the assured death or other event such as terminal illness or critical illness in return of payment of a speculated amount called premium at the regular intervals or in long lump sum by the assured. Also Awosika, (2005) from his own point of view postulated that life assurance is a risk transfer mechanism where in the proposer (the assured) agree to make small periodic payment called premium to another person (the assured) in return for the payment of a larger sum (benefit) on the occurrence of a specified event. Therefore from the above definition life assured is a financial service organization that provides intangible products or services to the entire public (ie individuals and organizations) in order to provide financial compensation for the effects for misfortune or fortuitous events. Based on the fact that life assurance policy is intangible it is difficult for life assurance policy to exist or function effectively without marketing because marketing is the oil which insurance is eating from.
Marketing as it was propounded by kotler (1972: 13) is the analysis planning implementation and control of programs designed to bring about desired exchange, with target audiences for the purpose of personal and mutual gain. It consists of individual and organizational activities aimed at facilitating and expediting exchanges within a set of dynamic environment. Also life assurance according to green and Triescman (2005) is a method by which a group of people may co-operate to ease the loss resulting from premature death of members of the group. Life assurance policies consist of the various peril death, Accident, Maturity and theft.
One of its major economic functions is to promote the mobilization of funds thus, offering a basis for financial intermediation to commerce trade and industry. As an industry, it is a source of employment to many state the experience which some people who had been dealing with insurance over the years has not been very cordial such unfavorable relationship had been published over the years, that it has created a poor perception of insurance service and the insurance companies has not help issues by the reticent in publishing their activities, one has to be aware of life assured policy, before one can make a conscious effort in purchasing its product, the insurance industry has the duty to crate awareness of their policies and their industry in the mind of the public. The inability of some individual insurance companies to let the public known that life assurance policy exist and what function they perform in rural areas has culminated a major challenges of life assurance policies in rural areas like Gokana, Ogoni and Eleme.
1.2 STATEMENT OF PROBLEMS
Inspite of the fact that insurance company plays a beneficial role to the survival of business in Nigeria and elimination of poverty in the society entirely, yet there is low patronage of insurance policies in the rural areas most especially life assurance policy. Research has shown that out of 70% of the people in urban areas of insurance products it is only 50% of the people that respond to life assurance policy and the 20% people in rural areas respond out of 30% then what happen to the remaining 30% of people in the both places. The problem of payment of benefits lack of statistics, inability by underwriter to design policies which will meet their current changes in society religions, liberalism, social clubs and the effect of insurance image in Nigeria all have contributed to the problems which to implede the rapid development of life assurance in the Nigeria society. Again the low demand for life assurance policy could be attributed to lack of public awareness, poor education and in a appropriate marketing strategies.
Based on the above realities this study is carefully designed to known the challenges encountered by the insurance intermediaries in the marketing of life assurance policies in rural areas and also to proffer solution to the identify problems.
1.3 THE PROPOSE OF THE STUDY
This study is aimed at challenges of life assurance policies in rural areas.
Other specific objectives to be accomplished include:
i) To ascertain the benefits of marketing life assurance policies in rural areas.
ii) To know the challenges of life assurance policies in rural areas.
iii) To proffer solution to the identified challenges associated with the marketing of life assurance policies in rural areas.
iv) To identify the strategies that can be used in curbing challenges of life assurance policies in the rural areas affect the prospective role of the assured.
1.4 RESEARCH QUESTION
In order to effectively and carefully carryout this research. The following questions were raised.
i) What is the benefit of marketing life assurance policies in rural areas?
ii) What are the challenges of marketing life assurance policies in rural areas?
iii) What are the likely solutions to the identified challenges in marketing life assurance policies in rural areas?
1.5 SIGNIFICANCE OF THE STUDY
This study will be of immense value or beneficial to insurance companies and their intermediaries, because it will increase their knowledge of the challenges of marketing life assurance policies in rural areas, and aid them in adopting strategies to overcome the identified challenges and will aid help student for students for further research or in their academic further range
It is believed that this study will go a long way in educating the people in rural areas in Nigeria and enlighten them on the benefits of purchasing life assurance companies are met.
Moreover, this study will reveal the importance of life assurance policies to the entire society both urban cities and rural areas. Having mentioned the beneficial role played by insurance companies in the survival of business and individual within the society, it is as difficult like an uphill task for one to live without insurance because man by nature is exposed to different kinds of risk which its occurrences are very fortuitous in nature. They are other areas where this study will be useful such as brokerage firms financial institutions and universities and colleges where insurance is been studied.
1.6 THE SCOPE OF THE STUDY
The scope of this study is the challenges of life assurance policies in rural areas. (A study of union assurance ). Although this study is set out to cover the entire insurance industries in Nigeria, constraint of time and money prevented me from visiting all the states of the federation. Hence the study was carried out in a particular sector of River state insurance capital firms in the state.
1.7 DEFINITION OF TERMS
INSURANCE:
This refers to an agreement between two parties (ie insured and insurer) in which the insured transfer his fear of future outcome to the insurer and the insurer promising to identify the insured at the occurrence of the insured event.
LIFE ASSURANCE:
This is a contract between insured and insurer where the assurer agrees to pay a sum of money (benefit) up on the occurrence of the assured death or other event such as terminated illness in return of payment of a speculated amount called premium at the regular intervals or in long lump sum by the assured.
PREMIUM:
This refers to the price of the policy.
INTERMEDIARIES:
This refers to the people who are engaged in any activity to promote insurance contract between the assured and the assurer.
ASSURED:
This refers to the person who transfers risk to the insurance company.
ASSURER:
This refers to the insurance personnel who is specialized in accepting risk from the assured or the assuring public.
RESEARCH:
This refers to as a careful study of a specified subject matter with the intention of discovering new facts and information about it.