Complete Material Cost #3,000
This study is an empirical investigation on the investment system of insurance companies, fund, benefit and challenges as carried out in African Alliance Insurance Companies in Port Harcourt. To guide the conduct of this research, views of different scholars were consulted in this work. In guest for more data required for the execution of this study a total of 65 questionnaires were administered among the staff and management of actual African alliance insurance out of which only 50 was successfully completed and returned representing 100% of the entire population as used in the work. To test the validity of the data collected, relevant hypothesis were formulated using the Pearson product moment correlation coefficient and student T test in analyzing it. Base on the finding summary were drawn and conclusion were made that there is significant impact of investment system of insurance on the performance of insurance business in Nigeria. Based on this conclusion, it was therefore recommended that; the governing body of insurance industry (NAICOM) should sanitize the industry to eradicate the poorly performed companies from operation to protect the image of the industry, and that only people with the required qualification and pedigree information should be entrusted in various position of trust in the industry.
1.1 BACKGROUND OF THE STUDY
The insurance industry is considered important in economies the world over. It can also recalled large sums of money by that money accumulated by this sector is invested in government approved schemes raging from granting of loans on mortgage, private and government securities and etc. Such investments adds to the tremendously to the advancement of the local industry and therefore to the gross domestic product of any economy with Nigeria not an exception.
The subject matter of insurance has been defined by various scholars. Insurance is a contract between two parties where by one party known as the insured agrees to pay a certain consideration called premium to the other party known as insurer and transfer the risk of uncertainty to the insurer who accept responsibility of restoring him to his position as he (insured) had enjoyed immediately before the loss occurred (Oladuoi Bauley) Business times April 2000. The emphasis lies in the process by which risk are transferred from individuals and organization to specialized risk assuming institution.
Others definition posits insurance as an organization set up to cater for other ailing organizations. (Financial trend August 2001). The point here is that the definition posits insurance business as an organization primarily set to give protection to other companies. Kayode Inyaka in his work (1996, p29) insurance industry in Nigeria has contributed to the economic development of Nigeria compared to developed economic countries is lopsided in that the life sector which has the capacity of providing funds for long-term investment is yet to be developed due to factors such as inadequate life assurance consciousness and the fact that the other more profitable areas abound for example real estate investment. Professor Irukwu in his work “Insurance and Economic Development posit the following”.
ECONOMIC DEVELOPMENT: The accumulation of large sums of money by insurance companies which are subsequent reinvested in government approved schemes include granting of loan on mortgage investment in government and private securities.
SECURITY: Giving financial security to businessmen and industrialist insurance industry is directly and indirectly involved gives confidence to individual and cooperate organization which enable them to invest in areas of their choice which ordinary they wouldn’t dare but now they can do so since they know that they will be taken care of by insurance companies.
SAVING: The fact that the insurance industry serves as an effective vehicle for the mobilization of National resources for national development effort, apart from the advantage that can be claimed from insurance on personal level, the benefit of the system lies in the fact that it encourages individual to save, which are subsequently employ in the economy.
INTERNATIONAL TRADE: Marine insurance occupies an important position in the fabric of Overseas commerce. By affording protection against fortuitous losses, it enable those engage in Overseas trade to venture their capital more freely without keeping large reserves of it to meet uncertainty and greatly expand the scope of their operation.
FOREIGN EXCHANGE: In addition home business insurers transact business abroad, and earn foreign exchange. Insurance industry make valuable contribution to the invisible export of the country, this is in terms of re-insurance of risk abroad undertaken Nigeria re-insurance corporation of Nigeria owned by the federal government.
EMPLOYMENT OPPORTUNITIES: Large numbers of persons are employed by the insurance industry, comprising junior and senior staff, these people are engage in full time basis.
There are also those engage impart time as agent, while some are on consultancy basis for instance, loss adjusters, arbitrators, risk surveyors etc.
In summation the important characteristics of insurance industry in any nation is that its funds can be invested in other sectors of the economy, which develop the nation.
1.2 STATEMENT OF PROBLEM
It is no gain saying that the funds polled by life assurance companies and general insurance businesses are made available in the stock-exchange market. However, it could be deduced from the view and assertion raised in the introductory part of the research that life sector of the insurance business, which can provide long term funds in under developed. This perhaps, is due to inadequate life assurance consciousness, the investible fund are insufficient, there are unnecessary inhibition imposed on them by laws, securities are not in abundance, suffice it to say, securities are scare. There exists dearth of man power.
1.3 PURPOSE OF STUDY
The purpose of the studying is to critically examine the investment of the insurance companies with a view to determine how it has helped in the development of the nation’s economy. To examine the extent of government regulation on the operation of the insurance companies, more especially on the investment of fund. To examine the problems faced by the statement of insurance funds.
1.4 SIGNIFICANCE OF THE STUDY
The project work would go a long way in helping the insurance companies, the insured and government as well for instance a careful look at the project would enable the insurance companies to observe where they have failed and recommendations would also stimulate them to action, which if properly executed would be to the benefit of all. Through the insurance laws, insurance will know the amount of insurance funds to invest; the insuring public is not left out in the benefit of this project.
1.5 RESEARCH QUESTION
- Do you understand the meaning of investment?
- Is there any need of investment in Nigeria insurance industry?
- Is there any effective system of investment in Nigeria insurance industry towards greater performance?
- Has Nigeria insurance industry witnessed any investment exercise since its inception of operation in this country?
- Can investment of insurance funds in Nigeria be controlled by NAICOM?
- Do the client has any financial benefit from the investment of policy of insurance
1.6 STATEMENT OF HYPOTHESIS
Ho: Investment system does not play a significant role on insurance companies.
H1: Investment system plays a significant role on insurance companies.
1.7 SCOPE OF THE STUDY
The scope of the study is mainly on the insurance business. The study would be centered on the investment system of insurance companies funds, benefits and challenges.
1.8 DEFINITION OF TERMS
The definition of the terms as used in this study are:
INSURANCE: A contract whereby, for specified consider at one party undertakes to compensate the other for a loss relating to a particular subject as a result of the occurrence of designing hazard.
ECONOMY: Economic system consists of the production distribution or trade, and consumption of economic agent can be individuals, business organization or government.
COMPANIES: A legal entity allowed by legislation, which permit a group of people, as shareholders, to apply to the government for an independent organization to be created, which can them focus on pursuing set objectives and empowered with legal rights which usually only reserved for individuals.
MOBILIZATION: Act of marshalling and organizing and making ready for use or action, mobilization of the country’s economic resources.
ORGANIZATION: A social unit of people that is structured and managed to meet a need or to pursue collective goals.
Complete Material Cost #3,000