Finance

Insurance in Nigeria; Benefits, Top 10 Insurance Companies, Problems, Prospects

This post is about Insurance in Nigeria. Here you will see the benefit of getting insurance, top 10 companies to buy your insurance from.

Loss occurs on a daily basis be it a loss of lives or properties but taking precautionary measures is key. Life, as it is popularly said, is full of risk and living in itself is a risk but one can’t just leave everything to chance as taking measures against unforeseen contingencies is very necessary.

One cannot help but wonder the role insurance has to play in life generally. Insurance is important when it comes to life insurance, businesses and properties against the contingency that arises from loss, damage or liabilities.

There is no immunity from death as it is inevitable and insurance can’t bring back the dead if such is the case but the family gets compensated. The insurance on life can also be beneficial if the insured is alive but in a critical condition, then insurance covers the medical expenses.

What is an insurance?

Insurance is a contract between two parties the insurer (insurance company) and the insured (individual or entity) in which the former undertakes to indemnify the insured against loss, damage or liability arising from an unknown or contingent event. Insurance manages risk and gives the insured financial protection against losses.

Insurance is not alien as people have come to know about its importance. Organizations and big firms need insurance as they are likely to face risk which is normally associated with business activities.

The basic principle underlying insurance is the pooling of risks as risk is part of the activities will partake in on a daily basis. Businessmen cannot do without insuring their businesses against any form of loss, damage or liabilities that may occur in the course of their business life. Insurance is not only restricted to businesses only but also to health, assets, life, etc.

In Nigeria, insurance as a business did not exist until the later part of the twentieth century but another local form of insurance occurred among communities which included extended family system, age-grade associations and the cultural unions. The funds collected periodically by the association and unions from members serves to help those who had experienced any form of loss and up till date such insurance is still practiced.

A person cannot receive any form of compensation from an insurance company if premium have not been paid to the insurance company. Premium is the money which the insured pays and it is this money in which the insurer use in compensating the insured.

The rate at which disaster occurs on a daily basis which put businesses in a tight situation especially haulage business which requires the transportation of goods to its required destination. Accidents are likely to occur on the way and if the truck used in transportation of the goods and the goods involved are not insured then the company bear the brunt of the losses by fully compensating the customers but if insurance is taken then the insurance company would be responsible for the compensation. The risk in which a business in this case should insure against would be goods in transit since it has to do with conveying of goods from the company to the customer.

It would be of your interest to know that the first operational branch of insurance company was opened in Nigeria in 1921 by Royal Exchange Assurance Company Nigeria Ltd and it remained the only company until 1949 when three British-owned insurance company was were opened up.

The insurance companies act was promulgated in 1961 by the federal government as it had to do with the necessity for registration or licensing of insurance companies in Nigeria. It should be noted that insurance companies in Nigeria and the insurance business is controlled by the Federal Ministry of Finance and the Office of the Director of Insurance. The insurance department of this ministry is responsible for controlling the activities of insurance companies so as to ensure compliance with the provisions of the Nigerian Insurance Decree 1976 and other relevant regulations related to the business of insurance in Nigeria.

There are some principles governing insurance that must be taken into consideration by the insured. These principles include Pooling of risks, Insurable interest, Indemnity, Subrogation, Uberrimae fides (utmost good faith), Contribution and Proximate cause.

Apart from the principles of insurance, there are various types of insurance in Nigeria which include: Auto insurance, Fire insurance, Property insurance , Life Assurance, Health insurance, Agricultural insurance, Marine insurance.

Moving away from the principles and types of insurance in Nigeria, there are also insurance companies in Nigeria that helps in managing risks associated with businesses or other functions. This article would state the insurance companies to look at for when you are about to take insurance in Nigeria.

Read Also: 7 Functions of Nigeria Deposit Insurance Corporation

Top 10 Insurance Companies in Nigeria

The following are the insurance companies in Nigeria :

1.Leadway Assurance Company Limited

This insurance company began operation in 1971 and was founded by Dr Hassan Olusola Odukale. The management team of this insurance company is considered the best in the industry.

Their service covers all the types of insurance as well as annuities, pension, savings and investment.

2.AIICO Insurance Plc

It is known as American International Insurance Company and an agency of the American Life Insurance Company. It began operation in 1963.

It is one of the biggest insurance company in Nigeria that provides quality services to their customers. Their services include:general insurance, life assurance and annuity, pension management, health insurance, mortgage management plan, etc.

3.Mutual Benefits Assurance Plc

This is another insurance company in Nigeria that began operation in 1995. To find out more information about this company, visit their website: www.mbaplc.com

4.AXA Mansard Insurance Plc

This insurance company provides health and education insurance as well as other services.

Website: www.axamansard.com

5.Cornerstone Insurance Company Plc

This is also another well known insurance company in Nigeria that has received a lots of rewards for their professionalism.

It began operation in 1991 and their management team is known for the best service delivery.

6.Royal Assurance Exchange Company Nigeria Ltd

This is the first insurance company to exist in Nigeria in 1921. It is aimed at responsibly and efficiently utilizing and mobilizing human, financial and technological capital to exceed stakeholder expectations.

7.National Insurance Corporation of Nigeria (NICON)

It was established to transact the business of insurance in Nigeria by Decree No. 22 of 1969

8.Nigeria Reinsurance Corporation

This insurance company was established in Nigeria to transact business of reinsurance within and outside Nigeria by Decree No. 49 of 1977.

9.African Reinsurance Corporation

This insurance company is owned by the OAU member countries but has its headquarters in Lagos.

10.Custodian and Allied Insurance Plc

This is a capitalized insurance company in Nigeria that began operation in 1997. It provides both life and general insurance.

As much as insurance is good for managing risks and reducing potential financial losses or hardships, it has its challenges.

See full list: List of 47 Insurance Companies in Nigeria and their addresses

Problems of Insurance in Nigeria

The following are the challenges of insurance in Nigeria:

1.Economic Instability

This is one of the problems faced by insurance in Nigeria. The unstable economy affects the insurance companies as prospective clients would be minimal in the sense that clients would not be able to invest in financial security due to low savings triggered by the bad economic situation.

Insurance companies cannot function effectively under such bad economic situation and since insurance companies intends to gain from the services they offer, they increase their rates and this is not at all promising.

2.Lack of Trust

Another problem of insurance in Nigeria is the lack of trust by the teeming population. Insurance companies suffer on this account because of reduced patronage.

Most Nigerians believe that insurance companies don’t meet up to expectation in the delivery of their services i.e they don’t pay claims.

3.Weak Manpower

Many insurance companies in Nigeria lack professional staffs because of the low remuneration they offer.

Therefore insurance companies offer poor services and this can affect their clientele as well as their image.

4.Competition

There are lots of insurance companies in Nigeria and as such the best way of attracting clients becomes difficult.

New insurance companies will have to work twice as much to bring in prospective clients as insurance companies that have been long in the game are considered to upcoming insurance firms.

5.Mismanagement

6.Inadequate access to information technology

Read more: 10 Problems of Nigerian Insurance And Possible Solution

Prospects of Insurance in Nigeria

For the insurance industry to be successful in Nigeria on the long run, the problems associated with insurance in Nigeria should be tackled.

-Adequate professional staffs should be employed.

-The premium to pay by the insured should be affordable to encourage and not discourage prospective clients.

-Enlightenment is key in order for people to know more of the benefits associated with buying insurance and this will make the insurance industry grow in Nigeria.

-Insurance companies should be able to meet up to their own end of the bargain by providing quality service and pay compensation as at when due without delay.

Read more: Challenges Facing Insurance Companies In Nigeria

Conclusion

Insurance in Nigeria if fully embraced and managed would contribute positively to the economic development of the country.

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Ifiokobong Ibanga

Ifiokobong Ibanga is the founder of InfoGuideNIgeria.com. InfoGuide Nigeria is a team of Resource Persons and Consultants led by Ifiokobong Ibanga. Page maintained by Ifiokobong Ibanga. If you need a personal assistance on this topic, kindly contact us.

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