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INSURANCE COVERAGE: A SAFEGUARD AGAINST BUSINESS RISK/LOSS

CHAPTER ONE

INTRODUCTION

BACKGROUND TO THE STUDY

The roles of insurance in modern business management cannot be over emphasized. Insurance companies provide invaluable services to individuals, company and governments and indeed to the economy. Infact, insurance is a catalyst for economic development, it is often said that it is the hand maiden of commerce and industry. There is no nation that does not feel the impact of insurance. As a matter of fact, its roles in the economic development cannot be divorce. The primary role of insurance according to Irukwu (2017) is “to ensure that financial looses of the individuals are fairly and equitable distributed over the insured community. The policy holders or the insured community pay premiums into a common pool out of which the unfortunate few who suffered losses are compensated”, (Irukwu 2017).

According to Umoh (2017) “As financial institutions, insurance companies pool the saving of those who buy insurance contracts, the insurance companies make such savings available for long term investment savings modern business management to benefits from the insurance industry in various ways”. In addition to the primary roles played by insurance firm, the insurance firm provides a number of secondary services which are of immense value to the society as a whole by offering financial security to business and industrialists; the insurance industry encourages and promotes commercial enterprises.  The present large scale commercial and industrial activity in Nigeria has been made possible to a large extent by the existence of an organized insurance system. Some insurance undertakings provide loan scheme for building of time on the security of life policy. The large sum of money accumulated by insurers are invested on appropriate securities and this helps to provide the society with a steady flow of investment funds which it can promote and develop local industries which are essential to the community.

Insurance companies today actively participate in loss prevention. Fire surveyors are trained to identify sources of potential risk in the production proves, storage of materials and use of electricity, etc. They make recommendations which will reduce the incidents of loss from these sources to the barest minimum. Theft surveyors make recommendations against thieves. The protective devices installed on their recommendation will deter many causal thieves and again reducing the number of losses. All these services provided by insurance companies directly or indirectly do assist modern business management and generally contributes to the growth of the economic development.

Anchor insurance company limited which is owned by the Akwa Ibom State Government was licensed in October 1989 as a General Business (Non – Life) insurance outfit and started operations in November of the same year. It has its head office at 7/13 Aka Road, Uyo, Akwa Ibom State. In January, 1992, the Company added life/pension class of insurance to its business portfolio thereby attaining the status of a composite insurance company. In 1998, Anchor Insurance Company Limited was registered by the NALCOM as a composite insurance company (R.C – 072), corporate profit, Anchor Insurance Company Limited RI32269. Presently, the company operates authorized share capital of two million naira (N90m) fully paid up (Corporate, profit, Anchor insurance)

BUSINESS SCOPE

. General Accident Insurance

. Burglary/Theft

. Goods – in – transit

. Cash – in – transit

. Personal/group pason/Accident

. Fidelity guarantee policy

. Bond

. Performance Bond

. Advance Payment Bond

. Bid Bond

. Customs Bond

. Credit Bond

. Motor Insurance

. Public Liability

. Workmen’s Compensation

. SPECIAL RISK

. Marine Insurance (Hull, Boats, Cargo)

. Engineering/Contractors all risk

. Aviation (Cargo)

. Energy (Oil and Gas)

. LIFE/PENSION INSURANCE

. Deposit Administration

. Whole Life Assurance

. Endowment Assurance

. Educational Assurance

. Flexible bash Payment Plan

. Level Term Assurance

. Mortgage Protection

. Family Income benefits

. Group Life Schemes

STATEMENT OF THE PROBLEM

One of the greatest problems of many nations is poor economic development; there are some sectors of the economy that are not contributing positively to the Gross National Product. The government therefore is facing various problems such as unemployment, poor industrialization, deficit in budget, social ills in the society, lack of adequate foreign exchange, inflation, low standard of living and many associated problems. Based on this, the researcher is therefore being compelled to conduct a study on how the insurance industry contributes to national economic development.

THE OBJECTIVE OF THE STUDY

The objectives of the study are:

. To find out how the insurance industry contribute positively to economic development of a nation.

. To assess how the insurance industry stabilizes business enterprises.

. To investigate whether insurance firms create job opportunities for the unemployed.

. To explore the various ways that insurance companies finance industrial projects in the country.

THE SIGNIFICANCE OF THE STUDY

It is expected that this study will be of great benefit. It will provide useful information to the management of Anchor Insurance Company Limited for decision making. The study will be of benefit to industrialists by enlightening them on the role of insurance in providing financial security. It will also help the management in conducting further research on ways of improving its services. Equally, the information found will be useful to government in various ways such as formulating favourable policies that will support the growth of industry.  Another significance of the research work is that information will serve as a reference material for study in higher institution of learning.   

RESEARCH QUESTIONS

The following are the research questions Does insurance company create employment in the society? Does insurance company contribute positively to the economic development of a nation? Does insurance finances industrial project in the country?

SCOPE OF THE STUDY

The scope of the study focuses on the contribution of insurance to economic development and Anchor Insurance Company Limited, Uyo is selected for the case study. The area of the study also extended to the basic concept, primary and secondary functions of insurance companies. 

THE ORGANIZATION OF THE STUDY

The study work is made up of five chapters. Chapter one contains the brief historical background of Anchor Insurance Company Limited, statement of the problem, purposes of the study, organization of the study and definition of terms. Chapter two further review of related literature, introduction, definition and concepts of insurance, roles of insurance, problems and prospects. Chapter three consists of research methodology, sources of data, method of data collection, techniques of data analysis, and the research design problem. Chapter four consists of data presentation analysis and discussion. Chapter five consists of summary, conclusion and recommendation.   

DEFINITION OF TERMS

There is need to define some of the terms used in this research study.

Insurance: This is a policy or an agreement (O. Narukwe in 2015)

Economic Development: This insurance and freight is a term which indicates that price quoted includes costs of the goods. This is a situation whereby the real income of a country increases over a long period of time provided the number below in property line not to increase and the distribution of income does not increase neither does it become more unequal.

Investment: This is the allocation of funds to appropriately

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