It is very obvious that the
financial system in any economy is the bedrock within which capital is
formulated, those take place and it made
possible by the intermediation of bank and non bank financial institution.
1.1 BACK GROUND OF THE STUDY
The non banking financial
institutions are the type of specialist intermediaries, through they are not
bank whose financial resource are primary from deposit their participation is
centered on the function of accumulation of longer term saving from either corporate
bodies or from individual as well as channeling these saving to individual
corporate bodies and government for the purpose of productive investment and
economic growth. These financial intermediaries are not withdrawable on demand
also they do not issue cheque like the bank, their function are limited to
certain specific area these institution which have been of very good
advantage to a developing economy like
Nigeria contribute immensely to the development economic growth of the country.
The non banking financial
institution are classify into difference categories namely:
Co-operative, tariff and credit societies
State finance corporation CHAPTER ONE
1.2 OBJECTIVE OF THE STUDY
The basic fact under these
objective of the study is to encapsulate the contribution of insurance
companies to the development of our country Nigeria. At this junction, the
insurance companies (NICON) promote the
business risk of both business and agricultural sector, financing the group
between the rich and the poor, also safeguarding against numerous risk to which
capital is exposed and take part in promoting bilateral and multilateral trade.
For example international trade would be greatly impeded if insurance and
export credit guarantee insurance schemes were not available.
Furthermore, the insurance
companies show different policy which people can venture into i.e. whole life
insurance policy and non life insurance policy and at the same time practice
both policy, under the whole life insurance policy payment become due on the
death of the life assumed, while in non life insurance policy payment became
due at the state data it has been mentioned above that it is possible for people
to take part in both polices this make it possible, according to the guide line
produce by insurance companies degree and some immediate benefit in taking at a
1.3 PROBLEM OF THE STUDY
For the purpose of literacy we
categorically state from the onset that non-banking financial institution
constitute and indispensable organ in achieving economic growth and development
of any nation like Nigeria.
However there exist a paradoxical
situation within context when in spite of the realization of this significant
percentage of Nigeria population area yet to be incorporated into non-banking
financial institution are the best word
to describe the attribution on the other hand the lack of public awareness about
the usefulness of non-banking financial institution like insurance companies
(NICON) and other financial house, people do not know their usefulness and
importance of their services rendered.
The poor development of
non-banking financial institution as well as the whole economy, such as quality
of insurance companies (NICON) service economic moral, social political and
even religions factor the project therefore delves into these problem and offer
constructive measure of suggestion that could of immense help in achieving
better non-banking financial institution in Nigeria.
1.3 SCOPE OF THE STUDY
This study has it main focus of
highlighting the effectiveness, regulation and economical important of
non-banking financial institution on the growth of Nigeria economy.
It helps to highlighting the
historical background and the nature of insurance companies. Moreover it also
has the case study of the above mention named insurance company, which is
National Insurance Corporation of Nigeria (NICON) the include the history,
effectiveness and activities of the corporation (NICON).
1.5 LIMITATION OF THE STUDY
The major difficulties
encountered during this study are just the administrative bottle neck and
unwarranted bureaucratic redotarism of obtaining information from the public
Some other Problems Encountered During the Study are:
i Inadequate data due
to haphazard record keeping
ii the uncooperative attitude of the people most especially
the literates one and even the learned people were reluctant to give adequate
In view of these alternative
means were explored from the National Insurance Corporation of Nigeria (NICON),
textbook and different journal book.
There is limitation in data collation
for the purpose of inter company comparison. It would have been appropriate to
collate various companies financial statement for the purpose of analysis them.
This was not possible simply because some companies were not willing to release
their financial statement.
DEFINITION OF TERMS
INSURER: This simply means
the insurance companies that issued insurance policy
INSURED: This means the
customer that is operating insurance policy with the insurance
SUM ASSURED/INSURED: This simply means the amount to be paid as
PROPOSAL FORM: This are the form that are pre-prepared
questionnaire issued by the insurer to be completed by either the propose or
his agent and which ask question about the subject matter of the insurance
since the insurer will use the information to assess a premium, the prospective
insured must disclose all material circumstance in utmost good faith, whether
or not he is asked form them an form.
The solution to the questionnaire
will assist the insurer to decide whether to accept the contract or not if the
proposal is accepted by the insurer. The first premium is paid and the
insurance of the cover note.
COVER NOTE: This is a note issued to the insured by the insurer
after the insurer has accepted the risk in principle and insured has made part
payment of the premium this will served as a temporary note before a
certificate of insurance is issued after the proposal form has been processed
and the insure is satisfied.
The cover note lasts for one
mouth, within this period a certificate of insurance is expected to be issued.
CERTIFICATE OF INSURANCE: this is a certificate issued by the
insurer, when the insured has made full payment of his premium after a month of
the Cover Note. In circumstance, when insurance cover is compulsory by law it
is used for a certificate of insurance to be required by the statue.
Employer’s liability insurance certificate
Motor insurance certificate.
PREMIUM: This is a certain amount of money to be paid or paid by insured
to the insurer for his insurance policy. The estimation of premium is based on
the on the I formation supplied in the proposal form, it may be paid weekly,
monthly or yearly.
POLICY AGREEMENT: This stand for an agreement between the insurer
(insurance companies) and the insured, this is different from insurance policy
because insurance refer to different class of insurance like marine policies
and accident policies e.t.c.
SUBROGATION: This term refer to the right of the insure has against
the insured after he has been fully indemnified and take over not only what is
left of the property, but all the legal and right to sue the third part for
damages, if an insurer pay for a total loss, he may take over the subject
matter and right attaching to it in a partial loss, he may take over the right
but not the subject matter.
ACTUARY: An expert in the calculation of risk and premium
EX-GRETA PAYMENT: This is payment made by the insurer to an insured
out of sympathy and outside legal obligation.
SURRENDER VALUE: This is a proportion of the amount contributed
payable to the assure who whishes to discontinue with his life endowment
UNDERWRITERS: This is the person that perform the task of
underwriting, that is some one on behalf of the insurer must assess the risk of
loss being proposed and decide whether it is acceptable or not when risk is
offered by a prospective insured if it is acceptable the under writer must
decide on the rate of premium to be changed and the term and condition to be imposed
on an insurance contract. The main business is cover or under writers a portion
of the risks. This is more common in marine insurance where a ship may be
insured for #150,000.00 and three (3) insurer can agree to insure the ship,
that mean each insurers liability will be limited to #50,000 if there is an
occurrence of the risk.
REINSURANCE: As it has been noted above the risk involved in a
struggle venture can be too huge for insurance company to bear one way of
spreading out such risk through insurance.
The transfer of risk from one
insurance company to another insurer (the re-insurer) all or part of its
liabilities in respect of claims arising under the contract of insurance that
is writes. This is a risk insured by Mr. AB with company EF etc the purpose is
to spread the risk so as to reduce the Wight of loss.
OVER INSURANCE: This happen when properly is over insured for more
than its worth. There is no advantage in this, as an insurer will never pay
more than the true VALUE of the properties.