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Abstract
The study was determined to examine the role of insurance in the petroleum industries in Nigeria. The research design employed in this work is the descriptive and survey method of data collection. The population of this research work comprises of (30) insurance practitioners were selected from the companies operating in Rivers State and forty five (45) staff of petroleum companies in operation in Rivers State. the sample size is 75 representing the sample size for the study and this forms the respondents for this study. The sources of data include documentation and interview, interview and questionnaire. The instrument used for data collection was the questionnaire and interview. The method for data analysis in this research is simple percentage. The research carried out has confirmed that insurance companies in Nigeria recognize the moral dilemma in claims management. Based on the finding of the study, we recommend that manager should put forward strategic plans to ensuring that insurance claims complaint files are properly kept, monitored and handled for needs that may warrant its usefulness in the future.
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
The petroleum industry is the largest and main generator of gross domestic product in Nigeria. For over five decades, Nigeria continues to experience remarkable increases in operational activities in her oil and gas exploration and exploitation, refining and products marketing. Crude oil was discovered in commercial quantity in the Niger Delta region of Nigeria in 1956 (Omofonmwa and Odia, 2009). Since then, oil exploration and exploitation has continued resulting into environmental destruction due to neglect and limited concern by the multinational companies in environmental management in the area (Eregha and Irughe, 2009). The onshore and offshore activities in the Niger Delta area have generated massive wealth and have contributed most to the socio-economic development of Nigeria. The industry, with its huge economic and social benefits, has created serious health and environmental pollution problems for the country in general and the host communities of the oil companies in particular. It was evident that Environmental Impact Assessment (EIA) was hardly undertaken prior to the approval of any project. Violent protests by communities are the most eloquent testimonies of the resistance to environmental pollution by the activities of the oil companies. Conflict in the Niger Delta arose in the early 1990s due to tensions between the foreign oil corporations, the Nigerian federal government, and a number of the Niger Delta’s ethnic groups who felt they were being exploited, particularly minority groups like the Ogoni as well as the Ijawin the late 1990s. The crisis over environmental pollution and economic marginalization from the oil industry reached a peak in January 1993 when 300,000 Ogoni protested against the oil companies. Such popular unrest grew steadily, where various ethnic groups began demanding compensation for years of ecological damage as well as control over their land’s oil resources. This unrest manifested itself at the outset as peaceful activist organisations that united their members on the basis of ethnicity.
Insurance as a risk transfer mechanism of uncertain tendencies, events, and financial losses can be efficient. The impact of insurance in road accident is very vital that is why “Blunden and Thirwell (2010) describe insurance as a contract of fortunate which depends on the occurrence of something that is not for seen and over which the insured of sensibly has no control.
Insurance as a risk transfer mechanism that facilitate shifting the cost of a risk away from insured who runs it to an external part (insurer) in exchange for payment called premium (Marshall 2001) Insurance is a financial contract is a way of dealing with consequences of risk perceived as external.
Insurance work base on the law of large number in the pool. This pool consist of different types of risk which premium paid by all members are use to settle the unfortunate one’s. So far the road users should embrace and patronize insurance because the relief fair from the mind of the individual and till it with confidence.
Nigeria has the status of developing country where road facilities are grossly inadequate to carter for the teeming population of road users. The discovery of oil in Nigeria came with its own problems. The prior to the oil boom in Nigeria road accidents were rare. This undoubtedly calls for improved road network accessibility. Roads were therefore built albeit without dive attention to standard. Consequently the road grew to be a death trap for Nigeria citizens and road users.
1.2 STATEMENT OF THE PROBLEM
In the modern times, risk-conscious individuals and organisations with high risk profile seek adequate protection against the negative outcomes that may arise due to the presence of risk. Insurance company too, in order to reduce its heavy obligations, seeks to transfer part of its risk burden to other organisations, the reinsurers (Garven, Hillard & Grace, 2014; Jirsarael, Kalantari, Kalantari, Jalah & Nozari, 2013). According to Park & Xie (2014), reinsurers are at the pinnacle of insurance market environment, because the abilities of reinsurers may bring about financial unrest within the insurance industry, which could result in spillover effect in the entire economy.
1.3 PURPOSE OF THE STUDY
The main aim of this research work is to determine the role of insurance in the petroleum industries in Nigeria, other objectives are as follows.
1. To examine the impact of insurance services in petroleum industry.
2. To educate workers in petroleum industries on how to handle various insurance policy documents.
3. To make sure that Nigerian insurance industry actually participate fully in the development of the local content initiative.
1.4 RESEARCH QUESTIONS
The following research questions are formulated to guide the study:
1. What are the impact of insurance services in petroleum industry?
2. To what extent are workers educated in petroleum industries on how to handle various insurance policy documents?
3. To what extent does Nigerian insurance industry participate in the development of the local content initiative?
1.6 SCOPE OF THE STUDY
The scope of the study is limited to petroleum industry which includes Nigerian National petroleum corporation and Nigerian AGIP Oil.
1.7 SIGNIFICANCE OF THE STUDY
To reveal the risk exposure units in the petroleum industry, to enable them make decision on which one to recommend for insurance protection.
The study will show the level of development achieved in the industry by the implementation of the local content policy.
This study will act as a means of creating more awareness on the importance of insurance to the petroleum industry as well as the general public.
This study will serve as a foundation for further study
The recommendations made at the end of this study will be a great importance to the insurance industry, graduates, the government as well as general public.
1.8 LIMITATION OF THE STUDY
The most limiting factors encountered in the course of caring out this research work was inadequate fund in other to go deeper in my research work. Also the time limit or duration required for competition as too short and encouraging. Availability of the material was a very difficult task due to the fact that some material available at the time of writing. It was a very stressful to see the material online, I really appreciate him for perfecting what he has started.
FINANCIALLY CONSTRAINT: this wanted to be set back in caring out research from visiting some vital organization which need to contribute to this work.
TIME CONSTRAINT: the time given in this research combined with, the time for other academicals work. So it limit the cruel point which would have been added to this work.
LACK OF RELEVANT MATERIAL: this also wanted to bring failure in this work, it was so difficult to get access to valid and rightful information but at least did not bring it to down the nature and quality of this work was been made available at the time of need.
1.9 DEFINITIONS OF TERMS
ROAD: this means any public high ray or access road been maintain by government which the public have access.
ACCIDENT: This is an unexpected event, not intend or designed. It is an unforeseen event or circumstance that its occurrence may lead to loss or damage.
PREMIUM: This is an amount of money paid by the insured to the insurer for the insurance cover provided in the policy
COMPENSATION: This is the sum insured that is been paid by the office to the beneficiaries of the death life of insure person or policy holder.
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