CHAPTER ONE
1.0 INTRODUCTION
Insurance brokers prefer to have special skill and
knowledge about insurance and are therefore, liable for
damages for failure to exercise due care and skill on
the discharge of their duties. Ojukwu (2011:2012)
Insurance play very important role on the economic
development of the nation. By the nature of insurance
business, insurers accumulate vast sums of money which
are invested in the various facets of the Nigerian
economy. According to Ojukwu (2011:190) the law of
Agency is an important subject on the study of
insurance law and practice the importance of Agency is
attributed to the fact that most of the insurance
transactions are carried on through insurance
intermediaries either as ordinary insurance agents or
insurance brokers which is based on fiduciary duties.
1
1.2 BACKGROUND OF STUDY
Industrial and General Insurance Plc (IGI) was
incorporated as a limited liability company on 31st
October, 1991 and commenced operation on January 1992,
bringing with it fresh beneath of dynamism and
innovation on to the Nigerian Insurance Industry. IGI
group is the largest underwriter on West Africa,
Insurance and remains in the flagship of the 19 group
which has shareholders finds on excess of N31 billion
and assets base an excess of N45 billion with
subsidence and strategic investment on other diverse
sectors and Washington D.C. the company achieved N9.394
billion on gross premium in 2009 from N8.4 increase of
11% or N966 million. Arising from the increase in gross
premium session also lose by 12% for N2.355 million. In
2008 to 2.631 in 2009. The company recorded a 28%
decrease an acquisition cost from N13 billion as a
result of increase in premium generated from direct
2
business. This is as a result of reduction in the total
amount paid as commission. Investment and other income
decrease by 48% to 1.08 billion in 2009 from 2008 due
on part to the reduction on investment income under
life business occasionally placement with banks. I.G.I
Company made a loss of N2.72 billion during the year
under review as recorded in 2008. This made the
shareholders fund to decline from N28.8 2009. However,
total assets remained stable at N37.895 billion.
ORGANIZATION STRUCTURE OF I.G.I
3
Oil and GasClaim
Marine and AviationRe-Insurance
Motor
Fire & AccidentContractors Lega
lPersona
l
BOARD OF DIRECTORS
MANAGING DIRECTOR
Marketing Technical Finance Administration
BOARD OF DIRECTOR
General Dr. Yakubu Gowon
GCER, Ph.D, PSC, JSSC
Chairman
He has been the chairman of the board of IGI since
its inception and currently leads a board of members
that lends its skills and years of experience to
directing the strategy of the company. He was the
Nigerian head of state and commander-in-chief of the
Armed Forces from 1966 to 1975.
4
Apostle Hayfoxo I. Alile
OFR, BA, MBA (Hon) DSC
Director
As well as being a director in the IGI board, he
was director of the Central Bank of Nigeria (1995-
2005). Since has retirement as the Director
General/Chief Executive Office of the Nigeria stock
exchange, he still serves in the governing council of
the exchange as well as on the board of the Nigeria
Security Printing and Minting Company Plc. A former
president of the Harvard Business School Association of
Nigeria, Apostle Alile is a fellow of each of the
institute of directors. The Nigeria institute of
management as well as the Charter Institute of Stock
Brokers.
Chief Gaffer & Animashawum
LLB (London) B.L
Director
5
Holds an LLB degree from the University of London
and is a Barrister of the middle temple. He has his own
Law practice successfully for several decades. His
business interest include insurance and construction
services amongst others.
Mr. Ola Vincent
CRF, B.com (Hons) DSC
Director
Served as the governor of the Central Bank of
Nigeria between 1977 and 1982. He performed the
national duty meritoriously setting exemplary standards
in accountability probity and efficiency.
Dr. Lateef Adegbite
Com, Ph.D (London)
He is a highly respected legal practitioner,
businessman as well as a social and religious leader. A
former attorney general of the Western state of
Nigeria, he is the Secretary-General of Nigeria Supreme
6
Council of Islamic Affairs, he is the principal partner
of Lateef Adegbite & Co. a leading Law firm which
specializes in commercial Law practice. His wealth of
knowledge and experience to the I.G.I board.
Mrs. Olubunmi Olowude
AILMT
Director
She is a laboratory scientist by profession and
has a distinguished career at the Nigeria National
Petroleum Corporation (NNPC) from which she retired as
head of Medical Laboratory Department.
Management Team Of Industrial And General Insurance
(IGI)
Remi Olowide OON - Executive Vice Chairman
Rotimi Fashiola - Deputy Managing Director
Sina Elusakimi - Executive Director
(Specialized)
7
Yinka Obalade Executive Director (Finance,
Accounts, & Investment)
Chief Ilesammi Fabodesa to Eve (International
Investment)
Kawde Funsho - Group Director (Human
Resources/Admin)
Hatiz Bakare - Group Director (corporate
planning & strategy
Obayomi Lawal - Director (Group Finance &
Accounts)
Akpglere Okoro - Director (Information and
Communication Technology)
Nelson Surlola - Director (Human Resource &
Administration)
Uwan Udonamak - Director (Risk Management
Services)
Doyin Adebanso - Deputy Director (Investment)
Yekani Ako - Deputy Director (Investment)
8
Reuben A. Gbiyah - Deputy Director/Co-ordinator
(North East Operations)
Doann Adekanmbor - Deputy Director cooperate
communicating
Leke Ogunbanbo - Deputy Director (legal)
Nhamo Manadea - Deputy Director (Life
Operations)
Chiyioke Ezikpe - Deputy Director (Private
sector marketing)
AMERICAN INSURANCE INTERNATIONAL COMPANY (AIICO)
AIICO Insurance Plc, commenced operations in 1963,
and became a public liability company in 1989; in 1990
AIICO got listed on the Nigeria Stock Exchange. AIICO
stability, strength, security and trust over the years
have placed AIICO Insurance Plc at a better advantage
in all classes of life Assurance, AIICO global
affiliation have also enable them to provide the widest
range of Non-life Insurance solutions to his clients.
9
At AIICO Insurance Plc, the company maintain a
first class pool of Reinsurer, partners and associate
companies such as:
Charts Group
AIICO PFA
Healthcare International
Multishield Limited
Zurich Insurance
Munich Reinsurance
Swiss Reinsurance
Africa Reinsurance
Continental Reinsurance
With 50 years of existence, 33 branch offices and
4000 agents AIICO is the household name in insurance
company in Nigeria. AIICO Insurance Plc is the 2nd
largest and one of the most profitable insurance
companies in Nigeria. AIICO exist to serve you.
Achievement and Awards
AIICO was given an International Certificate of A+
by Global Credit Rating Company (GCR) of South Africa.
10
AIICO is a socially aware and responsible corporate
entity. The company believe in impacting positively
within the environment, he operates and contributing
his quota to the nations development as a good
corporate citizen.
To this end AIICO is currently a:
Supporter of the United Nation International
Children Education Funds (UNICEF) Card Initiative.
Donor to the motherless babies home, Isolo Lagos.
Donor to the Pricelli School for the Blind,
Surulere, Lagos.
AIICO’s furniture donation to school and offices
in Iru-Victoria Island Local Government
Development Area as part of his relations policy.
Cash donation to Evaron Nursery and Primary school
Surulere.
AIICO is a financial services company supported by
a team of experienced professionals and risk management
11
specialist who design bespoke solutions that cater to
the versatility of his client individual needs.
AIICO services include:
General insurance and special risks
Life insurance
AIICO insurance is the largest life insurer in
Nigeria and major underwriter for General Insurance
business. AIICO is a key player in Oil and Gas rated on
the top three for General Insurance business in
Nigeria. AIICO travel insurance unit is currently the
market leader in the industry AIICO offer a wide range
of products and services in General insurance for
retail and institutional customer. These include, but
are not limited to:
Fire and special perils
Health Insurance
Motor
Burglary and House breaking
12
Group personal accident
Goods-in-transit public liability
Professional indemnity
Fidelity guarantee
Marine
Travels
Personal liability
Oil and Gas
Aviation
Engineering
Bendo
Director and office liability
CORPORATE MISSION AND VISION
AIICO Mission
AIICO exist to create and protect wealth for his
clients.
AIICO Vision
To become the indisputable leader in all markets he
chose to play in AIICO core values
13
Service Excellence
Trust
Team spirit
Entrepreneurship
Professionalism
Management Profile
Mr. S.D.A. Sobanyo, GMD/CEO - B.Sc, MSC, MBA, FCH
Mr. Onolabi Salami, Chief Client Officer - UB, BL
Mr. Jide Orimolade, Executive Director - B.Sc,
MSC, ACIN
Mr. F.I. Olabiyi, General Manager – MBA, FCII
Mr. Dipo Oguntuga, General Manager – B.Sc, MBA
Mr. Lekan Otusanya, Chief Finance Officer – BA,
FCA
Mr. Moruf Apampo, General Manager – MBA, ACIIN
Mr. Babatunde Fayemirokun, General Manager – B.Sc,
MSC
Mr. Sola Ayayi Deputy, General Manager – B.Sc
14
Mr.s Phil Maduagwu, Deputy General Manager – BA,
MA, MSC, ACIM
Mr. S.A. Oduroye, Deputy General Manager/Company
Secretary – LLB, LLM
Mr. S.A Lawal, Deputy General Manager – MBA, ACLL,
ACLLN, FLLN
1.2 MARKET ENVIRONMENT
According to www.efina.org.ng, the Nigeria
Insurance market like that of other countries around
the world has a long way to go in serving the needs of
the ordinary people. Indeed insurance in Nigeria is
still for the elite and the formally employed. However,
insurance apex body NAICON under the leadership of Mr.
Fola Daniel has introduced Micro insurance products to
be accessed by the low income earners, as takaful
insurance products was alongside introduced to the
insuring public to cut – through religious impediments
on insurance products as well as to deepen the
15
awareness. Conversely the Chartered Insurance Institute
of Nigeria (CIIN) lunched books for the study of
insurance at secondary school level to prepare students
writing insurance at INAEC LEVEL. However, the industry
is not immuned from myriad of challenges such as
complying to the (IFKS) international financial
recording system which 60% insurers are yet to comply
with. As ware acquisition of insurance companies is
also witnessed. The claims payment of Nigeria Insurance
companies without any element of doubt is been
skyrocketed as hundreds of vehicles are damaged and at
level 5000 lives lost due to the nefarious activities
of the Boko Haram insurgent. Thereby depleting the
motor insurance portfolio reserves and group life
assurance portfolio reserves of Nigeria Insurance
Companies.
1.3 STATEMENT OF THE PROBLEM
16
Insurance intermediaries have created problems in
selling insurance services in Nigeria. The myriad
problem created by insurance intermediaries in Nigeria
which the researcher observation in the course of his
study includes:
1.Non-remittance of premium collected by brokers
invariably result on the insurance companies
denying liability to the client in the vent of
loss occurring.
2.Dearth of professionally qualified personnel
affecting adversely the need to exercise due care
on the discharge of their duties.
3.In a bid to secure settlement of claim there is
misrepresentation of issue by the brokers.
4.Rate cutting by the broker affecting the premium
income of the insurance company.
5.The unprofessional conduct of insurance broker
such as aparty against the insurer rate – cutting.
17
1.4 OBJECTIVE OF THE STUDY
The researcher has the following objective to
pursue:
To determine whether insurance brokers have
performed their duty by exercising due care on the
discharge of their duty.
To examine whether insurance intermediaries are
performing up to expectation in their role to assist
the insuring public.
To find out whether intermediaries assist in
claims settlement procedure.
Determining whether insurance intermediaries in Nigeria
have contributed toward the distribution of insurance
services in Nigeria.
1.5 SCOPE OF THE STUDY
This research work will focus on an examination of
the contribution of insurance intermediaries to the
18
insurance industry. The researcher will use Industrial
and General Insurance Plc (IGI) and American Insurance
International Company (AIICO) as a case study.
1.6 SIGNIFICANCE OF THE STUDY
In view of extensive research carried out, it is
expected that this study will help intermediaries and
insurers in packaging their services in a way that will
contribute to the growth of the insurance industryss.
This study also placed a special importance. The
contributions of insurance intermediaries in selling
insurance services in Nigeria. It is expected that the
study will help insurance intermediaries in overcoming
or portraying the constraint which the intermediaries
create in displaying their duties to the insurer and
the insuring public. The study will as vital
information to potential new entrance into the industry
as they will avoid or improve on such constraint. It
19
will equally aid the existing intermediaries in
overcoming such problems in future.
1.7 STATEMENT OF HYPOTHESIS
The researcher formulated the following hypothesis
from the problem identified.
HYPOTHESIS I
H0: Non-remittance of premium collected by brokers
does not result in the insurance companies denying
liability to the insured in the event of loss
occurring.
H1: Non-remittance of premium collected by broker
results in the insurance companies denying
liability to the insured in the event of loss.
HYPOTHESIS II
H0: Rate-cutting by the broker does not affect the
premium income of the insurance company.
H1: Rate-cutting by the brokers affects the premium
income of the insurance company.
20
1.8 DEFINITION OF TERM
1.Indemnity: Placing the insured, subject to the
policy terms in the same financial position after
a loss as the insured occupied immediately before
the happening of an insured event Ojukwu
(2011:127).
2.Insurance Broker: Insurance broker profess to have
special skill and knowledge about insurance and
therefore liable for damages for failure to
exercise due care and skill in the discharge of
their duties Ojukwu (2011:193).
3.Utmost Good Faith: It is the duty of the assured,
the man who desires to have a policy to make a
full disclosure to the underwriter without being
asked of all material circumstance because the
underwriter known nothing and the assured knows
everything, Lord Justice Scrutton in Rozanes V.
Bowen 1928.
21
4.Proximate Cause: This is active efficient cause
that set in motion a train of events which brings
about a result without the intervention of any
force started and working actually from new and
independent source. Ojukwu (2011:155).
5.Insurance Intermediaries: These are middlemen who
are in Business to sell insurance covers on behalf
of the insurance companies to the buyers of
insurance.
6.Remittance: A sum of money that is sent to
somebody in order to pay for something.
7.Agent: A person whose job is to act for or manage
the affairs of other people in business.
8.Premium: The consideration given by the insured in
return for the insurers undertaking to cover the
risk against in the policy of assurance. Lewish V
Norwich Union Fire Insurance Co. Ltd 1916.
9.Ostensible Authority: A legal relationship between
the principal and contract or created by a
22
representation made by the principal to the
contractor, intended to be and infact acted on by
the contractor that the agent have authority to
enter on behalf of the principal into a contract
of a kind within the scope of the “apparent”
authority, so as to render the principal liable to
perform any obligation improved on him by such
contract. Ojukwu (2011:203).
10. Avalanche, Mass or plenty of something.
23
CHAPTER TWO
LITERATURE REVIEW
2.0 INTRODUCTION
In this chapter the researcher will analyse the
avalanche of various literary works such as textbook,
newspapers, presented papers as well as various
legislations. The review of these literary work will
enable the researcher establish their relevance to the
project work. The study of the contributions of
insurance intermediaries to the insurance industry,
insurance plays a major role on the economic
development of Nigeria through the investment of the
economic development of Nigeria through the investment
of the vast sum of fund at their disposal. According to
Ojukwu (2011:190) most of the insurance transactions
are carried on through insurance intermediaries either
as ordinary insurance agents or insurance brokers.
24
2.1 THE DEVELOPMENT OF INSURANCE IN NIGERIA
Prior to the colonization of Nigeria, there was no
organized insurance business as we know it today.
Instead, there existed some traditional system of risk
sharing. Each ethnic group given it’s culture used the
social institutions it had to spread risk amongst them.
A look at the Igbo ethnic group would prove so. The
institution for risk sharing in the Igbo ethnic group
involved the extended family system. Polygamous family
system, age-grade associations, claim union, masquerade
groups, isusu association, trade or craft union, etc.
These institution offered mutual insurance like schemes
for strong benevolence to their members who has
suffered some misfortunes such as death,ill health,
fore ranges or court cases.
The coming of the early British traders who
established trading post on the west coast of Africa
25
raised the need for modern insurance. It started with
the appointment of operate agents to render insurance
services as representative of their mother insurance
companies based on Britain. In 1918, the Royal exchange
Assurance company started operation in Nigeria and was
represented by Barclay back DCO, until February 1921,
when it was converted to a full branch of the parent
company. It operated alone until 1949 when three other
British companies entered the scene. There were tobacco
insurance company limited, the legal and general
assurance society limited and the Norwich Union fire
insurance limited, Dr. Kingsley O. Mbadiwe in 1950
established the first indigenous insurance company, by
1960, there was as many as 25 insurance companies in
Nigeria, out of which 4 were indigenous insurers. As at
1970 the number of registered insurance companies in
Nigeria grew to 66, a lot of operations were moving in
to their share of what was perceived to be a goldmine.
26
The surge contain with its attendant problem such that
there was the need for legislatives to streamline the
insurance business in Nigeria.
2.2 INCORPORATION AND REGISTRATION OF INSURANCE
COMPANIES
Before persons may commence to carry on insurance
business in Nigeria, he will first have to incorporate
and register the company under companies and allied
matters Acts 1990 under section 4 of 2003 Act provides
that subject to the provision of his Act no insurer is
registered by the commission under this Act.
Registration of insurance under section 5 Act states
that an application for registration as an insurer
shall be made to the commission in the prescribed form
and such other document or information as the
commission may from time to time or require.
27
In insurance no person shall commence or carry on
any class of business in Nigeria except
(a) A company duly incorporated on a limited
liability company under the company and allied
matter Act 1990
(b) A body duly established by or pursuant to any
other enactment to transact the business on
insurance or reinsurance section 34.
In respect of insurance brokerage company section
36 of insurance Act 2003 provides that no person shall
transact business in Nigeria as an insurer broker
unless he is registered under this Act section 36(2)
states that a person who transact business as an
insurance broker without having being registered on
that behalf under this Act commits an offence on is
liable to conviction. Moreso in respect of the
operating as an insurance Act 2003 provides that no
28
person shall transact business as an insurance agent
unless
a) He possesses a certificate proving the individual
application by the chartered insurance application
institute of Nigeria referred to this Act as the
institute is duly appointed by our insurer and censed
in that halt under this Act section 34 (2) state that
an application for a license as an insurance agent
shall be made to the commission in the prescribed form
and be accompanied by the prescribed fee and such other
document as prescribed from time to time.
2.3 REGULATION OF INSURANCE COMPANIES IN NIGERIA
According to Ojukwu (2006:36) he propounded that
the Federal government has through various legislations
been very active on the development of insurance
company. The motor vehicle (third party insurance) Act
1945 was the earliest legislation on insurance in
29
Nigeria. Federal government of Nigeria intervention was
necessary in order to guarantee future development of
insurance business and also to ensure that insurance
companies honour their obligation to members of the
public. In order to achieve establishment of a vehicle
insurance industry, parliament set up Obade commission
whose report formed the books of insurance companies
Act 1961 Ojukwu(2011:64).
2.3.1 INSURANCE COMPANIES ACT 1961 AND 1964
The insurance companies Act 1961 laid the
foundation for registration and development of
insurance companies in Nigeria. The Act provides for
registration and development of insurance companies and
prescribed a statutory minimum capital of £25,000 for
and general insurance £50,000.00 for composite
insurance company. The insurance companies Act was
closely followed by the insurance (miscellaneous
30
provision) Act which required all insurance companies
operating in Nigeria to be incorporated locally. The
act further required that insurance companies invest
40% of it’s net premium in Nigeria. The insurance
companies Act and insurance miscellaneous provisions
Act did not provide for effective supervision of
insurance companies and had to be replaced by insurance
Decree of 1976. Ojukwu (2011:64).
2.3.2 Classification of Insurance Business in
Nigeria
Statutorily insurance business is divided into two
main classes insurance Act 2003 provides as follows;
a.Life assurance business
b.Non-life insurance (General) Business
Section 2 in the case of life assurance; the shall be 3
categories;
31
a. Individual life Assurance
b. Group life assurance and person business
c. Health insurance business
In the case of general insurance, there shall be 8
categories
a.Fire insurance business
b.General accident insurance business
c.Motor vehicle insurance business
d.Marine and aviation insurance business
e.Oil and gas insurance
f.Engineering insurance business
g.Bonds credit guarantee and surety insurance
business and
h.Miscellaneous insurance business.
DIAGRAMMATIC CLASSIFICATION OF INSURANCE SECTION 2 (1)
INSURANCE ACT 2003
32
CLASSIFICATION OF INSURANCE
Life Insurance Business
General Insurance Business
Health Insurance
Oil & Gas
Group and
Person
Motor
Engineering
Marine & Aviation
Bonds & credit Guarantee
Fire Individual
Life
Gene
ral
Acci
dent
Miscellaneous
2.3.3 Nature of Insurance
The nature of insurance is that the good fortunes
of the many are used to compensate the misfortune of
the few. The community makes contributions into a
common fund of which those of their members who suffer
33
losses are compensated. This community of people
contributing into the common fund is described as
policy holders. The policy holders know that
misfortunes such as death, personal accident, burglary
auto accident, failed credit as in banks and other
financial institute, losses and stopping of income etc
befall humanity, they have seen it to their members
they have heard of it happen to others and they know
for sure that these can happen at their own time, the
only uncertainty being when, how and to whom it will
happen. By insurance arrangement the policy holder
(contributions) has transferred those risks to the
central managers of the funds (Insurance companies)
with the aim that should any fall victim of any
casualty they will compensate them with the central
fund in order words, insurance is all about risk
transfer.
2.4 PRINCIPLE OF INSURANCE
34
Insurance is governed by well defined principles,
the research will discuss the under mentioned
principles
a) Indemnity
b) Utmost good faith
c) Insurance interest
d) Proximate cause
2.4.1 Indemnity
According to Ojukwu (2011:923), the principle of
indemnity requires that insured cannot recover more
than the actual less. The definition of indemnity was
propounded by Lord Justice Bret Castilian v Preston
1883, they very foundation in my opinion on every rule
which has been applied to insurance law is this namely
that the contract of indemnity and indemnify only and
this contract means that the insured, in case of a loss
against which the policy has been made shall be full
35
indemnified, that is the fundamental principle of
insurance law and of ever a proposition is brought
forward which is at variance with of that is to say,
which either will prevent the insured from obtaining a
full indemnity or which will give the insured more than
a full indemnity that proposition must certainly be
wrong. Insurers indemnity fear insured in the event of
loss in the following ways,
1.Case payment: Minor losses are settled by means of
cash payment to the insured who is obliged to
support his claim with necessary, purchase of
document where the loss is extensive, has
adjuster will be engaged to establish the amount
of his and the insurers will effect settlement of
the amount in practice insurers settle claims by
cheque.
2.Repairs; repair the vehicle is a means in which
the insurer provide indemnity where a vehicle is
36
involved in an accident, the insurers usually
authorize or motor garage to effect repairs. In
Oshevire Ltd V. Tripoh motor, the insurers
authorized Tripoli motors to effect repairs of an
accidental vehicle on the understanding that the
insurer would pay the bill. The insurers refused
to pay the bill on the grounds that the vehicle
was not satisfactory repaired and argued that the
auto engineer want not a party to the contract of
insurance. The court of Appeal held that the
agreement was a tripartite content and bondly by
three parties to it namely; She Insurer the
insured and the property instead of paying cash.
Replacement is usually applied in respect the high
value such as Jewelleries fares, or works of art.
Also on glass insurance the window and doors are
replaced by glazing forms who are paid by She
Insurer. Replacement is also new motor vehicle is
37
destroyed insurers can indemnity the insured by
replacing the damage vehicle with a similar model.
3.Reinstatement: in property insurance the policy
expressly gives the insures she option to pay
cash, replace repair or reinstate on the event of
any loss or damage. Once the insurer elect to
reinstate the building, they cannot with draw
because reinstatement has become onerous, insurer
are bound to reinstate to it; original condition.
Ojukwu J. C. (2011:129).
2.4.2 Utmost Good Faith
According to Ojukwu (2006:78) the definition of
utmost good faith was postulated by mainisfield in
carter v Bohm 176 insurance is contract of speculation.
The specific fact upon which the contingent choice to
be computed lie must commonly in the knowledge of the
insured only; the underwriter trust to his
38
representation and proceeds upon confidence that he
does not keep back any circumstance is his knowledge to
mislead the underwriter into a belief that circumstance
does not trust other proposition of utmost good faith
was provided by Lord Justice Scrutons in Rosance v
Bromean 1928.. It is the duty of the assured, the man
who desires to have a policy to make a pill disclosure
to the underwriter without being asked of all material
circumstances because the underwriter knows nothing and
the assured knows everything. That is expressed by
saying that is a contrast of utmost good faith
“uberemar” fide.
2.4.3 Insurable Interest
The existence of insurance interest is an
essential ingredient in any insurance contract. The
general rule is that the insured must has an insurable
interest in the subject matter of insurance, otherwise
39
the contract is void and destitute of legal effect,
simply put, the insured must have a legal relationship
with the subject matter of insurance. Irrespective of
the class of insurance be it life or non-life business.
It is important to note the legal maximize the non
action other, that is to say legal rights arrive from
illegal cause Ojukwu 2006.
Macura “Northern Assurance co. Macura owned most
of the shares of the company he had transferred his
business (timber) to the company, macura took out fire
insurance policy on his name and not in the name of the
company. The timber was destroyed by therefore. The
insurers, Northern Assurance company denied liability;
the insurers argued that mac
ura having transferred his business to the company has
no insurable interest on the timber. Lord summer said,
though macaura “owned almost all the shares in the
company and the company owned him a good deal of money
40
but neither as creditor nor as shareholder could be
insurer the company’s assets”. The concept of separate
legal entity which is central to company law,
established that the property of the company belongs to
the company not to the shareholders. Possession of
property only is not enough by itself to fund insurable
interest Ojukwu (2011L18).
2.4.4 Proximate Cause
Prompt settlement of claims is the mainstay of
insurance companies however, in order that the insured
can recover from the insurers under a policy, the
insured must establish that the loss was caused peril.
The need for a direct relationship between the cause
and effect informed the causa proxima rule, that is to
say, the proximate cause rule. The cause must be
proximate in efficiency not in time and the onus of
proofs lies with the insured. The insurer on the other
41
hand have the responsibility of establishing that the
loss is not covered because of operation an expected
peril. The classic definition of proximate cause was in
Pawsey V Scottish union and National insurance co 1908
propounded by Lumb J as the “active efficient cause
that set in motion on train of events which brings
about a result without the intervention of any force
started and working actively from a new and independent
source. It was afforded that insurers have the
responsibility of showing that the circumstances which
constitute an exercise for non-payment of the claim
have infact arisen. To use common language, she onus of
proof so far as the exeuse goes, is an onus which rests
upon the insurer”. Ojukwu (2011:51)
2.5 THE NEW PRODUCT
A new product is a set of tangible and intangible
attributes for want satisfaction which the buyer or
42
consumer perceive as new or significantly different
from the existing and/or competing products that are
being replaced. A company’s assortment of the products
must be planned. Product planning is the art of adding
and/or dropping products and modifying products
according to what the changing market requires. The
non-service product may change on size, colours,
styles, quality, fact and quantities. The insurance
product may only change in enrichment, packaging, price
and assortments, a new product must adjust it self to
the market. New product development is a significant
aspect of product planning. It is concerned with
reliably replicating successful business patterns on
the basis of the definition of a new product, three
basic types of new product can be identified;
1.Truly innovative products: These are truly unique
products of which no similar products has ever
existed, examples are the cure for acquired immune
43
deficiency syndrome (AIDS) or cancer. The category
also includes products that are completely
different from existing product but satisfy the
same needs, such as broad casting and films shows,
solar energy on relation to other existing energy
sources, plastics also serve the same purposes as
metals and woods. A unique new product should
generate profit or benefits by identifying the
customers wants and needs and translating them
into products and/or services specification that
provide the denied market share within each market
segment.
2.Replacement products: There are products that are
only significantly different from the existing
ones. Station (1981:162) noted that instant coffee
replaced ground coffee and coffee beans and that
frees-dired instant coffee replaced instant
coffee” group life insurance can replaced
44
industrial life insurance if suitably enhanced or
enriched.
Imitative products
These are products that are new to a particular
organization but not new to the market. It is a “me
too” attitude of capturing part of an existing market.
2.6 INSURANCE INTERMEDIARIES
These are the insurance middlemen who are in
business to sell insurance covers on behalf of the
insurance companies to the buyers of insurance. The
basic different between a broker and an agent is that a
broker is an insurance professional or an insurance
expert where as the agent is generally a non insurance
man whose only interest is to sell insurance in return
for his commission.
2.7 CLASSIFICATION OF INSURANCE INTERMEDIARIES
45
Insurance intermediaries can be classified as
follows;
Agents
Broker
Loss Adjusters
Agents: Legally an agent is one who is employed to
perform an act on behalf of his principal within a
specified guidance. A duly appointed agents, acting
within scope of this authority bonds his principals by
his actions just as though the principal has performed
them personally. There are full time and part time
agents. The full agents are employed on full time basis
by the insurance companies and are remunerated by way
of salary (allowance) commission or an some cases both
salary and commission. The part time agents, are
remunerated only by part time commission, because the
insurance agent is not an expert and usually not an
insurance professional, he is not required or expected
46
to posses a sound technical knowledge of the insurance
business, and he cannot be sued for professional
negligence. In insurance Act 2003, section 35,
subsection 4 it is provided that, “A person who
transacts business as an insurance agent without having
been duly appointed commits an offence and is liable on
consideration to a fine of 100,000 or to imprisonment
for a term of 3 years or to both such fine and
imprisonment and in addition, the court may make an
order requiring the person to refund any sums collected
by him, while so transacting the business, to the
rightful owners of other persons entitled there to”.
Broker: The broker is a full time special of
professional standing, or at least, the law expectation
to be, because the broker undertakes the responsibility
of advising, recommending and arranging insurance
cover, he is presumed in law to have the necessary
professional and technical knowledge of the relevant
47
class of insurance business. His primary aim is to act
for the insured in the handling of all his insurance
problems including assisting in claims settlement and
using his position and connection in the market to get
the best bargain to the insured.
In insurance Act 2003, section 36 provides that,
No person shall transact business in Nigeria as an
insurance broker unless he is registered under this
Act.
b) Application for registration as an insurance broker
shall be made to the commission in the prescribed form
and accompanied by the prescribed fee and such other
document as may be prescribed from time to time
c) If the commission is satisfied that the applicant;
i. Has the prescribed qualifications and
ii. Is a partnership or a company with limited
liability duly registered under the companies and
48
allied Matters Act, 1990, it shall register the
applicant as an insurance broker by issuing the
applicant with a certificate of registration.
4) No form or company shall be registered under this
section unless each partner, chief executive and
executive director is registered as an insurance broker
by the institute.
Low Adjuster; A loss adjuster is a professional
intermediary whose primary function is to investigate
insurance claims with the ultimate view of making
impartial recommendation to the insurer regarding the
extent of their liability under the terms of the
policies. Where liability is established the loss
adjuster has the task of adjusting the claim
appropriately, within bias, and this will be contained
in his report to the insurer. He plays the role of an
49
independent arbiter. To be able to accomplish his
functions adequately, the loss adjuster should be
thorough in his investigation, be transparent honest,
just and fair. His integrity should not be in doubt by
the insurance industry since insurers are expected to
rely on his advice. Also he is expected to be vastly
knowledgeable and experience in several disciplines to
be able to cope with the diversities and complexities
of some claims situation. In essence the adjuster will
be required to make an inspection at the scene and to
discuss the claim, often at length with the insured and
witness with a view to preparing a written report which
for example, in the case of fire would necessitate
giving exact details of the premises, their
construction and occupation, an accurate account of the
event surrounding the fire, a precise description of
the damages, an opinion as to the cause of the fire, if
necessary a well argued opinion as to the possibility
50
of obtaining a recovery against any third party and
finally recommendation as to the amount to be paid on
settlement of the claims reference being made to the
cost of reinstatement or repairs together with comments
concerning adjustments made for depreciation or
appreciation salvage, application of policy limits,
excess and average conditions, and occasionally
recommendations for the improvement of risk.
2.7.1 Classification Of Insurance A Gents
The following are the classification of insurance
agents
Ordinary insurance agent
Insurance brokers
Lloyds broker
51
AGENT
Ordinary Insurance Agents
Full Time Agent
Staff Agent Independent Agent
Non-Insurance Agent
Estate Agent
De Credere Agent
Factor Agent
InsuranceBroker
Lloyd’s Broker
Brokers
2.7.2 Ordinary Insurance Agent
Ordinary Insurance Agent as intermediaries are not
required to possess professional knowledge of the
technicalities of the insurance they arrange, however,
a reasonable degree of proficiency insurance is
mandatory. Section 34 (1) insurance Act provides that
no person shall transact business as an insurance agent
unless he possess a certificate of proficiency issued
in the name of the individual applicant by the
chartered insurance institute of Nigeria. A licence
52
issued to an insurance agent shall entitle the holder
to act as an insurance agent to the insurer. Ordinary
insurance agents are further categorized into the
following groups
i. Full Time Agents: These are agents employed by an
insurer to concern for insurance business
exclusively for the particular insurance company
that engaged them.
ii. Independent agents: these are insurance agents not
lied to any particular insurer and include
Bankers, motor dealer, Accountants retired
insurance practitioners
iii. Staff Agents. Staff agents are usually authorized
by their employers to act as agents to the
company. Such staff agents are paid commission in
respect of business introduced. Ojukwu (2011:194).
2.7.3 Insurance Brokers
53
Insurance brokers typically work for the policy
holders in the insurance process and act independently
or relation to insurer. Brokers assist clients on the
choice of their insurance by presenting them with
alternatives in terms of insurer and products. Acting
as “agent” for the buyer brokers usually work with
multiple companies to place coverage of clients.
Brokers obtain quotes from various insurers and guide
clients in determining the adequate policy from a range
of product. Insurance brokers profess to have special
skill and knowledge about insurance and for damages for
failure to exercise due care and skill on the discharge
of their duties. By virtue of section 36 (1) insurance
Act –no person shall transact business in Nigeria as an
insurance broker unless he is registered under the Act.
The applicant must be a company with limited liability
and registered under the companies and allied Matters
Acts. Section 36 (3) (b).
54
2.7.4 Lloyds Brokers
Lloyd’s underwriters has its origin from the
activities of merchants who gathered at the coffee
house in the city of London owned by a proprietor
called Edward Lloyds. Merchants seeking insurance cover
for various risks namely ship, voyage and cargo will
pass round a slop containing the details of the risk.
Each participating member will accept proportion of the
risk according to his financial ability. The contract
was fully executed when the total value at risk is full
underwritten. This practice led to the use of the term
underwriter. Ojukwu (2011:195).
2.7.5 Non-Insurance Agents
It is important to note that there are
intermediaries who are non insurance agents and these
include the following;
55
1.Estate Agents; An estate agent is a person who us
engaged to find a buyer for a property, and has
implied authority to make representation on the
property whether or not estate agents is paid will
depend on terms of engagement.
2.Del Credere Agent: De credere agent is an agent
engaged to sell goods and for extra remuneration he
undertakes that the purchaser he finds will pay, for
the goods he buys. He does not guarantee any other
liability of the purchaser, for instance if the
purchaser refuses to take delivery. Ojukwu
(2011:198).
3.Factor Agents: A factor agent is a mercantile agents
who has authority over goods consigned to him, to
sell the goods in his name and has a general
discretion over the goods. The agent can refuse money
on the security of the goods. See Factors Act section
1889 section (1). Folks v king 1923, in folk case,
56
the owner of a car delivered it to mercantile agent
Hudson for sale for the equivalent of N150,000.00.
Hudson sold the car for the equivalent of N90,000.00
to king who bought in good faith without notice of
fraud. Hudson misappropriated the M90,000.00 and
folks sued King for the recovery of the car. It was
held that King acquired good title. Scrutton L. J
said that it is enough to show that the true owner
did internationally deposit in the hands of the
mercantile agent the goods in question Ojukwu
(2011:198).
4.Agent of Insured: a general rule, only the agent
under the direct control of the insurer is the agent
of insurer, all other agents are deemed to be the
agent of the insured. It was noted that insurer are
required to print conspicuously on the front page of
the proposal form that an insurance agent who assist
57
an applicant to complete a proposal form is the agent
of the applicant section 54 (2) of insurance 2003.
i) If an agent is expressly appointed by the insured
to place his insurance with insurers he is agent
of the insured.
ii) If the only recognition the insurer gives to the
agent is the payment of his commission, the agent
is the agent of the insured.
iii) An agent who advises the insured where to
place his business is the agent of the insured.
The agents is liable for damages if the insured
acts on his advice and suffers a loss.
In Osman v. J Ralph Moss Ltd, the brokers
recommended to the plaintiff Osman for the purpose of
insuring his vehicle to an insurer already known in the
insurance circles to be financially weak. When the
58
company was wound up the plaintiff was involved in an
accident for which he was liable and was also fined for
driving without insurance. The broker was held liable
for the amount then insured was fined and also the
amount of damages paid to third party.
Agent of the insurer: the agent is regarded as the
agent of the insurer in the following circumstances
i) The agent is the agent of the insurer if the
insurer gives the agent proposal forms and cover
notes to execute on behalf of the insurer. See
Ngillri v NICON 1998.
ii) If the agent has express or implied authority to
collect premium on behalf of the insurer, section
41 (1) provides that where an insurance business
is transacted through an insurance broker, the
insurance broker shall not later than 30 days of
collecting the premium pay to the insurer premium
collected by him.
59
iii) If agent acted without express authority and
in the past the insurers has ratified his actions
the agent is the agent of the insurer. In Murfitt
v Royal Insurance Ltd 1992, the plaintiff secured
a fire insurance cover from the agent of the
insurer who informed him that the risk will be
held covered pending the decision of the insurers.
The insurers declined the risk before they knew
that fire had occurred. The insurer refused to
honour the risk on the ground that the agent has
no authority to grant the cover. The plaintiff
argued that the agent had in the past granted
cover, which the insurers ratified the court
decided that the fact that the agent had for two
years granted the insured cover with the knowledge
and consent of the insurer was a special factor,
the insurer were liable as the agent has implied
authority. Ojukwu (2011:201).
60
2.8 CREATION OF AGENCY AND ACCOMPANYING AUTHORITY
Agency can be created in the following way:
2.8.1 Express Creation
An agent maybe expressly appointed either verbally
or on writing. By appointment in writing specifically
for a purpose for example, where an insured appoint a
broker to his insurance. The appointment can also be
made verbally in freeman & Lockyer V. Buckhurst park
properties (mangal) ltd 1964 Lord Diplock s aid that,
“an actual” authority is a legal relationship between
principal and agent created by a consensual agreement
to which they alone are parties. It’s scope is to be
ascertained by applying ordinary principle of
construction or contracts, including and proper
implication from express words used and on the course
of business between the parties.
61
2.8.2 Creation by Estoppel
Where agency is created by estoppel, it gives rise
to an apparent or ostensible authority. The meaning of
apparent or ostensible authority was stated by Lord
Justice Diplock in freeman and lockyer v Buckhurst park
properties (Mangal Ltd 1964, the facts of the case are
that, kapoor acted as managing director of the
defendant company although there has been no
appointment of kapoor to that office. The company’s
articles of association that is, the rules regulating
the internal operations of the company, provided that
the board should appoint a managing director, the
minutes of the meeting of the company did not reflect
any such appointment. Kapoor engaged the services of
the plaintiff a form of architects and surveyors. The
company refused to pay for the services of the
plaintiff on the ground that kapoor has no authority to
engage them. It was held that the company was bound by
62
the contract. Lord Diplock stated that “an apparent” or
“ostensible authority is a legal relationship between
the principal and the contractor created by a
representation, made by the principal to the
contractor, intended to be and infact acted on by the
contractor, that agent has authority to enter on behalf
of the principal into a contract of a kind within the
scope of the “apparent” authority, so as to render the
principal liable to perform any obligations imposed on
him by such contract.
2.8.3 Implied Authority
The meaning of implied authority was given by Lord
Denning in Hely-Hutchison v Bray head Ltd 1968. The
facts of the case are that Richards the second
defendant was the chairman and chief executive or de
facto managing director of Brayhead Ltd. He often
concluded contracts on his own initiative and later
63
informed the board who acquired in Richard’s mode of
operation. The plaintiff was the managing director of
Perdio Ltd another company that planned to merge or be
acquired by the defendant company. As part of the
agreement the plaintiff became a director on Brayhead
Ltd. Mr. Richards and Hutchison agreed that the
plaintiff should invest more money in pediro ltd on
Richard signing document on behalf of Bray head to
indemnify the plaintiff. When sued on these transaction
the defendant held that Mr. Richards has no authority
to make the contracts the judge held Richard had
apparent authority to bind the decision but on the
grounds that he had actual authority. In the court of
Appeal lord Denning said that in freeman & Lockyer case
at was shown that actual authority might be expressed
or implied. It is express when it given by express
words, such as when a board of directors passes a
resolution which authorize two of their members to sign
64
cheque. It is inferred from the conduct of the parties
and the circumstances of the case, such as, when the
board of directors appoint one of their members to be
managing director. They thereby impliedly authorized
has to do such things as fall within the usual scope of
that office. Actual authority, express or implied is
binding as between the company and the agent, and also
as between the company and others whether they are
written the company or outside it.
2.8.4 Creation By Ratification
Though the initial act was unauthorized a
principal may acquire rights and subject himself to
liabilities by retrospectively approving the act of an
agent. However, there are a number of conditions that
must be satisfied before an unauthorized act of agent
can be ratified namely;
65
i. The agent must have made the contract as an agent in
the first place. In Keighley, Mazsted & Co. v Durant
1901. Keighley authorized an agent a corn merchant
to bay at a certain price; the agent exceeded his
authority and bought the can in his own name instead
of in the name of the principal. However, Keighley
agreed with the agent to take wheat at the price the
agent has agreed, but he failed to take delivery.
Durant resold at loss and sued the agent and
Keighley. The house of the lords held that the
contract cannot be ratified, as agent contracted for
himself his undisclosed intention is not enough to
warrant ratification. This is supported by an old
saying of brain CJ that it is common learning that
the thought of a man is not friable for the devil
has not knowledge of a man’s thought”.
ii. The principal must have been in existence at the
time of contract. In Kelner v Baxter 1806. The
66
Gravesend Royal Alexandra Hotel company Ltd. Was
being formed and Kelner agreed to sell wine to the
promotes of the uniformed company namely John
Baxter, n caster and J. dales. All concerned knew
that the company was being form. However, a written
agreement was signed between Kelner and the promotes
for the purchase of wine for the equivalent of
N240,000,00. The wine was delivered to Gravesend
Royal Alexandra Hotel company ltd and was consumed.
Before payment could be made the company went into
liquidation. Kelner sued the promotes who claims
that liability has passed, by ratification to the
company and no liability attached to them the
promoters were held liable. Eric C. J said that
“where a contract is signed by one who professes to
be signing an agent but who has no principal
existing at the tame, and the contract would be
altogether on the person who signed it, he is bound
67
thereby, and a stranger cannot by a subsequent
ratification receive him from responsibility.
iii. The principal must have capacity at the time of
ratification. In Grover and Grover Ltd V Mathew
1910. At the expiry of a policy the broker wrote to
the underwriters for renewal of the policy, without
the knowledge of the plaintiff. A fire occurred
after the broker requested for renewal but before
broker’s action. When the plaintiff knew about the
transaction they purport to ratify the action of the
broker. It was held that the insurers were not
liable. It should be noted that in respect of marine
insurance ratification is possible after a loss in
marine cases.
Effect of ratification: The effect of ratification is
that the principal in deemed to have made the contract
at the time when the agent did infact make it. In other
words, ratification is retrospective. In Boton partners
68
v Lambert 1888 an offer was accepted by an unauthorized
agent. This acceptance was after ratified by the
principal but before the time of ratification, the
offer or has attempted to revoke it. It was held that
by ratification the principal has become party to the
contract as from the time the agent accepted the offer.
Ojukwu (2011:201-208).
2.9 REGULATORY BODIES OF BROKERS
These are institutions and organization set up
either by government or private bodies to facilitate
insurance operation in Nigeria. These are so many
bodies representing various interest and sectors of the
Nigeria insurance market but for the study we will view
the following
The Nigeria council of Registered Insurance Brokers
(NCRIB)
69
The Nigerian Corporation of Insurance broken, the
precursor of the council was established in 1952 to
provide a central organization for the regulation of
all practising insurance brokers in Nigeria. This body
got it’s first legal recognition in 1991 when the
insurance decree no 58 of 1991 made it compulsory for
all practising insurance brokers to be members of this
body before being registered by the commissioner of
insurance. However, the brokers quest for full legal
recognition through the acquisition of a charter did
not materialize until 2033. When the National Assembly
passed the NCRIB bill and the president chief Olusegun
Obasanjo gave his assent on 4th July 2003. The name of
the body was therefore changed from “The Nigeria
corporation of insurance Broker” to “The Nigeria
council of registered insurance Brokers (NCRIB) with
the signing into law of the NCRIB Act, the insurance
broking profession received full legal powers to be
70
able to regulate the practice as reputable profession
that is an integral arm of the Nigeria insurance
industry. Section 13 of the Act confers on his body
exclusive power to regulate the conduct at all
registered insurance brokers in Nigeria (both
individual and corporate members).
2.9.1 Role Of Insurance Brokers
The brokers play a crucial role to the insurance
industry. The influence of brokers remain very high on
the industry, there is no substitute for the brokers in
the insurance market. According to chief J Akin George
(Nov. 23rd 2001 Journal) the brokers and agent serve as
link between the insured and the insurer, they are the
first contract with the insured who is being introduced
to the business perhaps for the first time. As the
English say, “The first experience lasts long” the way
and manner the broker comes across to the insured will
71
therefore determine whether a successful business deal
can be struck or not. The role of the broker has been
discussed under the following heads.
Insured
Insurer
General
Insured
The role of the broker to the insured cannot be
neglected. The broker is presumed to hold himself out
of the proposer as a person who poses a sound technical
knowledge of insurance and therefore is prepared to
give sound professional advice and arrange insurance
cover in the most favourable manner for all those who
instruct him to act for them. Therefore the duties of
the broker to the insured or proposer cannot be
underrated and so are examined here.
72
i. Use of proper skill and care: The duty of the broker
to use proper skill and care in carrying out his
broking responsibility is very important because
failure to do so amount to negligence of the duty or
breach of contract. The need to exercise due care was
illustrated in Osman V. J Ralph Moss. The broker as
an agent appointed by the principal contract on his
behalf has a legal duty to carry out the instructions
of his client, even when the client has not given any
specific instruction, the broker in under obligation
to act as a bonafide in the best interest of his
client without prejudice. The insured is legally
entitled to relay on the broker to carry out his
instruction faithfully.
ii. Renewal and changes in the policy: where new
insurance products are introduced to the insurance
market, it is the duty of the brokers to bring these
to the doorstep of the insuring public. A part from
73
being busy on policy issues and administration it
then becomes the function of the agents to liaise
more directly and regularly with the insuring public
to ensure that the time and accurate message gets to
the doorstep of the grass roots.
iii. Processing of claim: when claims occur, it is the
duty/brokers to pursue such claims in the interest of
the clients. The broker knows where to go and what to
do such that claim face little or no difficulties.
All these comes under service industry to the
insurance business when efficiently carried out you
can be sure of effective insurance delivery. The
insurance broker as a professional with legal
standing is duty bound to respect the confidence of
his client and must not disclosed, abuse or misuse
any confidential information received about the
proposer with the permission of the insured.
74
Insurer: although the broker is the agent of the
insured for purposes of affecting the insurance, he
becomes the agent of the insurer for the purpose of
collecting premium is a consideration for insurance
contract is usually paid in cash before the insurance
contract comes into force insurance Act 2003 section 41
stats that the broker must pay all premium collected by
him on behalf of any business transacted through him to
the insurer within 30days of collecting such premiums
otherwise the bro ker will be guilty of an offence and
liable on conviction to in June of 25,000 for the third
offence together with the cancellation of the
certificate at the registration of such broker. The
duties of the broker to the insurer are examined below
1) Imputation of brokers knowledge to the insurer; the
agent of the insurer acting with actual or ostensible
authority acting on course of his official duties any
knowledge lee acquires will be imputed to the insurers
75
who cannot claim non-disclosure from the insured in
Blackely V National Mutual life association, before the
completion of a life assurance contract the agent knew
that the proposer has a brain tumor which has just been
operation upon. It was held that the knowledge of the
agent in imputed to the insurer. Ojukwu (2006:104).
General: The broker play a vital role in the creating
of awareness of insurance policies to the public, the
manner of the broker to the public determines the rate
of success of the insurance company. Chief J Akin
George (Journal Nov. 23rd 2001) Continued by saying that
the broker or agent lake a public relations agent, an
image maker for the industry and how he/she carries out
this function will determine the extent to which an
effective insurance delivery is achieved. The general
role of brokers is headed below,
1.Creating Awareness of insurance products; as
brokers, the insurance intermediaries are in a
76
position to ensure improved knowledge of insurance
as well as creating appropriate awareness of the
insurance industry among the public. In a society
where less than 10 percent of possible insurance
business is taking place, you use see the importance
of this particular function of the broker is
ensuring that the public adequately appreciate the
importance of risk insurance in their day to day
living.
2.Economic Development: The broker as well as
insurance companies contributes vehemently to the
economic development of Nigeria. According to miss
Lalla Ben Barka (daily champion Tues 1 June 2010)
“Insurance industry performs several key traditional
functions but particularly relevant is the role of
facilitating and promoting investment which
increases capital formation that consequently
stimulates the promotion of goods and services”. She
77
continued by saying that it also creates employment
opportunities, generates wealth and income and also
reduces poverty all of which are important roles of
economic development. The Nigerian content Act 2010
became operational effective from 2nd April 2010. The
Act is generally accepted is a significant Landmark
in the development of the oil and gas industry in
Nigeria. The main plank of the act is the
prescription of minimum threshold for employment of
local facilities. The fundamental objective being
the development of local capacity through increased
indigenous participation.
2.10 POSITION OF INTERMEDIARIES IN STRUCTURE OF
DISTRIBUTION OF INSURANCE IN NIGERIA
From the point of production to end-usage an
insurance policy is usually moved between several
persons. When a proposal (offer) is made to an
insurer, it is considered for acceptance or rejection
78
based on it characteristics. Where the underwriter
accept it a counter offer is made to the prospective
insured outliving the terms of the contract as to be
contained in the policy. The proposal forwarded to an
insurer can be initiated an agent, broker or
prospective client on his or her own. Transactions can
be direct between any of the members on the channel.
Structure of different forms of position occupied by on
intermediary during insurance transactions are outlined
below;
1) Insurance company – Agent – prospective client
2) Insurance company – Broker – prospective client
3) Insurance company – Agent – Broker –Prospective
client.
The insurance company represents the production source,
agent and broker are intermediaries or middlemen while
prospective clients are consumer or customers.
79
2.10.1 Role Of The Intermediaries On Business
Performance Of Insurance Companies In Nigeria
1.Intermediaries extend the distance between customers
and insurers this gap makes insurer to be alien to
customers, thus making it easier for public
perception of insurers to be lopsided due to low
close relation. When negative occurrences take place
it become easy to generate an after effect on
insurers.
2.Intermediaries provides insurer with a good source of
market research information. This window insurer to
know direction of wants and needs of their respective
target markets. With such background knowledge
insurers are able to create better products to serve
the desires of the market.
3.There is a relationship between intermediaries and
insurance policy research by customers. Given their
closer look with the general public intermediaries
80
are able to encourage customers to renew their
policies. It creates more premium revenue for
insurers.
4.Intermediaries increase the business cost of
insurance companies they have to be paid for their
efforts towards buying and renewing of policy. The
lest comes mostly as commission for a sale of
policies. There other incenteres but all aimed at
encouraging intermediaries to generate more business.
2.10.2 Services Been Marketed By Intermediaries
Services been marketed by intermediaries include
all classes of insurance. Both life and general
insurance business they include;
1.Motor Insurance: Motor vehicles are either insured as
private cars and commercial vehicles depending on
their uses.
81
2.Fire and Special Perils Insurance; thus policy
promises to pay the insured for losses or damages
resulting from fire, lightening, bush fire,
explosion, aircraft, earthquake, wind hurricane,
cyclone etc.
3.Loss of profit (consequential loss); apart from the
direct loss of physical property during fore there is
also the risk of other indirect losses that often
occur. Such loss include; loss of profit and other
fixed charges like pre-paid rent, cost of finding new
accommodation, auditor’s fees and salaries of
employees that have to be paid etc.
4.Burglary and House Breaking Insurance: covers loss or
damage by burglary and house breaking following
forcible and violent entry into or out of the insured
premises. The interest covered are your office
furniture, fixtures, fitting and utensils, printed
books etc.
82
5.Machinery Breakdown Insurance: under this policy,
insured is indemnified against loss or damage to
machinery whether at work, rest on dismantled for the
purpose of serving or inspection. Also covered in
liability to third point resulting from the use of
the named machinery bodily injury, death, or damage
to property
Public liability insurance: in the course of your
claims, you may stand the risk of being liable top a
third party who may have suffered accidental death
bodily injury illness to third party including legal
cost. This could result from the use of plants, lefts
and hosts etc.
Bond: a bond simply means a guarantee given by one
party (the guarantor) to another (the principal)
(employer) on behalf of another (the contractor) to the
effect that contractor shall fulfill certain obligation
under contract or statute as the case may be and
83
whereby the guarantor agrees in the event of default by
the contractor to make good the loss of the principal.
Group Life Assurance: The principle of this act is that
if a collective terms (or temporary) assurance under
which insurance company pays the chosen lumps sum
benefit to the benefit of the beneficiaries of the
company (scheme) members who die from any the of cause
while still in force. The total premium in respect of
all staff members is a year at the commencement of the
policy and subsequent renewal dates.
2.11 CONTRIBUTIONS OF INSURANCE INTERMEDIARIES IN
INSURANCE BUSINESS
Intermediary activity benefits the overall economy
on the national levels. The role of insurance the
overall health of the economy is well understood. There
are several factors that intermediaries bring to the
84
insurance market place that help to increase the
availability of insurance generally.
2.11.1 Innovative Marketing
Insurance intermediaries bring innovative
marketing practices to the insurance market place. This
deepens and boarders insurance markets by increasing
consumers awareness of the protections offered by
insurance, their awareness of the multitude of
insurance options, and their understanding as to how to
purchase the insurance they need.
2.11.2 Dissemination Of Information To Consumers
Intermediaries provide customers with the
necessary information required to make educated
purchase/informed decision. Intermediaries can explain
what a consumer need and what the options are in terms
of insurers, policies and prices. Faced with a
knowledgeable client base that has multiple choices,
85
insurers will offer policies that fit their customers
needs at competitive prices.
2.11.3 Dissemination Of Information To The Market
Place:
Intermediaries gather and evaluate information
regarding placements, premiums and claims experience.
When such knowledge is combined with a intermediaries
understanding of the needs of it’s clients, the
intermediary is well-positioned to encourage and assist
in the development of new and innovative insurance
products and to create markets where none have existed.
In addition dissemination of knowledge and expansion of
markets within a country can help to attract more
direct investment for the insurance sector and related
industries.
2.11.4 Sound Competition
86
Increased consumer knowledge ultimately helps
increase the demand for insurance and improve insurance
take-up rates. Increased utilization of insurance
allows producers or advantage of a more competitive
financial climate, boasting economic growth.
2.11.5 Spread Insurer’s Risk
Quality of business is important to all insurers
for a number of reasons including profitability,
regulatory compliance and ultimately, financial
survival, insurance need to make sure the risk they
cover are insurable-and spread these risks
appropriately so they are not susceptible to
catastrophic losses. Intermediaries help insurers in
the difficult task of spreading the risk in their
portfolio. Intermediaries work with multiple insurers,
variety of clients, and in many cases in a broad
geographical spread. They help carriers spread the risk
on their portfolios according to industry, geography,
87
volume lane of insurance and other factors. This helps
insurers from becoming over exposed on a particular
region or a particular type or risk thus freeing
precious resource for use elsewhere.
2.11.6 Reducing Cost
By helping to reduce cost for insurer, broker
services also reduce the insurance costs of all
undertakings in a country or economy, because insurance
is an essential expense for all business, a reduction
in prices can have a large impact on the general
economy, improving the overall competitive position of
the particular market (www.clab.com//role of inint.pdf.
2.12 PROBLEMS CREATED BY INTERMEDIARIES IN SELLING
INSURANCE SERVICES.
Insurance intermediaries create problems on the
process of selling insurance services, the problem
include;
88
2.12.1 Non-Remittance Of Premium Collected By Brokers
Instance of non-remittance of premium collected by
brokers exist where heavy sums of money show in the
balance sheet of insurance company as agency debt due
from agents or brokers. Such outstanding premium deny
the insurance companies investment income which they
should have earned it such premium have been available
to then promptly. The insured whose premium is
outstanding cannot be said to be enjoying any cover
against the risk for which the premium is due.
2.12.2 Death Of Professionally Qualified Personnel
The death of insurance is such a technical are
which requires those who are professional sound to be
able to handle it in the effective way. Most brokers
lack experience due to the fact that they are not
professionally trained to carry out brokerage services
89
thereby not been able to exercise due care on the
discharge of their duties.
2.12.3 Misrepresentation Of Issues
Brokers supply false information to others in a
business transaction and the parties rely on such
information about the risk. That is to say on a bid to
secure settlement of claim the broker mispresent the
issue and this creates a problem for both the client
and the insurer.
2.12.4 Rate Cutting
Insurance brokers cut the premium rate in their
business transaction because of competition. This
professional conduct arises out of the desperation by
some brokers to business irrespective of the
implication and this affect premium income of the
insurance company.
90
2.13 CONCLUSION
The researcher has reviews as many relevant
literature as possible for the literary work known as
literature review. The historical development of
insurance has been touched, the incorporation and
registration of the company, the regulation of
insurance companies Act of 1961 and it’s miscellaneous
provision followed by the classification of insurance
according to section 2 of insurance Act 2003 which
states life and non life (general) business.
Furthermore, researcher identified the classification
of insurance intermediaries and the study of the
contribution of insurance intermediaries to the
insurance company.
91
CHAPTER THREE
RESEARCH METHODOLOGY
3.0 INTRODUCTION
This chapter covers the research procedures
employed in conducting this study. It includes research
design, population of the study, sampling design,
description of instrument for collecting data and data
analysis technique. It deals with the method of data
collection and defines the population as well as the
sample size adopted for this research. (Anyanwu,
2000:1).
3.1 RESTATEMENT OF HYPOTHESIS
The researcher formulated the following hypothesis
from the problem identified.
HYPOTHESIS I
92
H0: Non-remittance of premium collected by brokers
does not result in the insurance companies denying
liability to the insured in the event of loss
occurring.
H1: Non-remittance of premium collected by broker
results in the insurance companies denying
liability to the insured in the event of loss.
HYPOTHESIS II
H0: Rate-cutting by the broker does not affect the
premium income of the insurance company.
H1: Rate-cutting by the brokers affects the premium
income of the insurance company.
3.2 RESEARCH DESIGN
Research design is the structuring of
investigation aimed at identifying variables and their
relationship to one another. it would also be seen as a
complete framework that gives a guide in collecting and
analysing the data for a study. In this study, research
93
design can be defined as this investigation of the
behaviour, opinion or other manifestation of a group of
people by questioning them (Anyanwu 2000:46).
3.3 AREA OF COVERAGE
The target population of this study is Industrial
and General Insurance Plc (IGI) and American Insurance
International Company (AIICO). But due to time and the
problem of distance, this researcher chooses branches
of these mentioned insurances companies at Owerri, Port
Harcourt and Enugu.
3.4 SOURCES OF DATA
The researcher will employ two sources of data in
carrying out this research and they include; primary
and secondary sources of data.
3.4.1 Primary Data
This primary source is questionnaires designed by
the researcher will be administrated on the company and
94
through oral interview which will be held with the
managing director or some top management staff of the
company.
3.4.2 Secondary Data
Documented records of insurance company are
provided like conferences papers presented in the
journals, textbooks, business journals, newspaper and
other write ups in magazines including past research
work of the study.
3.5 SAMPLING DESIGN
This section seeks to answer four basic questions:
a.Who is to be surveyed?
b.How many are to be surveyed?
c.How are they to be selected?
d.How are they to be reached?
3.5.1 Sampling Unit
95
The sampling unit addresses those who are to be surveyed. In
this research work, the questionnaires were distributed among the
various organizational levels of Industrial and General Insurance Plc
(IGI) and American Insurance International Company (AIICO)
respectively which include the executive managers (11), manager (14),
supervisors (23) and clerks (29).
Organization NumberExecutive Manager 11Manager 14Supervisors 23Clerks 29Total 77The population of the study is 77.
3.5.2 Determination of Sample Size
The sample size of this research can be determined
with the Yaro Yamers formular. Kelechi (2008:30) gave
the formular as:
Nn = 1 + N (e)2
Where n = Sample size
96
N = Population size numbers of items in
population is 77
(e)2 = Square, maximum in population of
sampling error.
5% = Sampling error.
Nn = 1 + N (e)2
77n = 1 + 77 (0.05)2
77n = 1 + 77 x 0.0025
77n = 1.1925 = 64.5702
.: n is 65 approximately.
This shows that 65 questionnaires were given out
and 60 were returned duly completed and will be
analyzed in the next chapter.
97
3.5.3 Method of Data Analysis
The selection of appropriate data analysis is a
very important aspect of the research work. The nature
of the data and hypothesis determines they statistical
instrument to be employed. In this study however, dye
to the nature of this research and the sample size. The
researcher chooses the two-way ANOVA model. The two-way
ANOVA model may be represented by:
Xij = U + i + βj + eij
I = 1, .... a
J = 1, .... b
U = Overall mean
i = the fixed roll (treatment) effects.
βj = the fixed column (replication) effects.
ASSUMPTIONS
a.The mathematical form u+ǝi+βj implies that row and
column effects are additive ie – a treatment
effect is the same in all replications, apart from
experimental errors.
98
b.The error term, eij are independent random
variables, normally distributed with mean O and
variance O2. They represent the extent to which the
data depart from the additive model as a result of
experimental errors.
COMPUTATION OF TWO WAY CLASSIFICATION
Let xij represent the measurement obtained for the
unit ie, in the ith row (treatment) and jth column
(replication). Row totals and means are donated by x
and x respectively. While x and x, denote column totals
and means. The overall mean is x. The table below
demonstrates the general procedure for computing the
analysis of variance.
PETITIONING TABLE
Two-way table with a treatment a and b replicable (block).
Treatment Replication J = 1, ... b1 =1,2,...a 1 2 . B Sum Mean
1 X11 X12 : X1b X1
99
2 X21 X22 : X2b X2
: : : : :: : : : :A Xai Xa2 : Xab XaSum Xi X2 : Xb Xa
Mean
Formular
( x ij)2
Correction C = ab
Total SS = x 2ij - C
X12 + X2
2 + . . . Xa2 - C
Treatment SS A = b
X12 + X2
2 + . . . Xb2 - C
Replication SS B = a
Residual D = Total SS – Treatment SS –
Replication SS
For the ANOVA table
SS = Sum of Square
MS = Mean of Square
100
DF = Difference
ANOVA TABLE
Source of
variation
DF SS MS F-Ration
Treatment (a – 1) A A/(a – 1) A/(a-I)Replication (b – 1) B B/(b – 1)Residual (a-1)
(b-1)
D D/(a-1)(b-
1)
D/(a-1)
(b-1)Total A+B+D
Fcal = A/(a-1)
D/(a-1)(b-1)
Ftab = F (a – 1), (a – 1) (b -1 ),
101
Acceptance Region Rejection Region
PCF
0F. tab
DECISION RULE
Right the Null hypothesis and accept the alternative
hypothesis, if our calculated F value is greater than
the value found from the Ta table, otherwise accept the
Null hypothesis.
102
CHAPTER FOUR
PRESENTATION, ANALYSIS AND INTERPRETATION OF DATA
4.0 INTRODUCTION
In this chapter, the researcher presents in
tabular form the data gathered through questionnaire
administration. This will be analysed using the
percentage method. In the test of the hypothesis, the
two way ANOVA will be used to analysis the data
presented.
4.1 DATA PRESENTATION
The researcher distributed a total of 65
questionnaires to the staff members of both the
Industrial and General Insurances Plc (IGI) and
American Insurance International Company (AIICO) in the
Owerri, Port Harcourt and Enugu branches. Out of the 65
distributed questionnaires 60 were returned duly
completed.
103
COMPANIESBranches IGI AIICO Total Response Per. %Owerri 15 10 25 23 92%Port Harcourt 10 10 20 19 95%Enugu 10 10 20 18 90%Total 35 30 65 60 92.31%
The table shows that 65 questionnaires were
distributed 35 to IGI and 30 was given to AIICO making
it 65, 60 were duly completed and returned representing
92.31% success.
4.2 SUMMARY OF RESPONSES FROM QUESTIONNAIRE
DISTRIBUTED
Section A
Question 1: What is your gender?
Options Responses PercentagesMale 35 58.4%Female 25 41.6%Total 60 100%
The table shows that 58.4% are male, while 41.6%
are female.
104
Question 2: What is your age bracket?
Options Responses Percentages28 – 38 21 35%39 – 49 29 48.3%50 – 63 10 16.7%Total 60 100%
This table shows that 35% of the respondents fall
between the age bracket of 28 – 38, 48.3% of the
respondents fall between the ages of 39 – 49, 16.7% of
the respondent fall between the bracket of 59 – 63.
Question 3: What is your marital status?
Options Responses PercentagesSingle 25 41.7%Married 35 58.3%Total 60 100%
The above indicates that 41.6% of this respondents
are single, 58.3% of the respondents are married.
Question 4: What is your qualification?
Options Responses PercentagesMSc 4 6.7%
105
B.Sc 20 50%HND 16 26.7%OND 10 16.7%Total 60 100%
The table above shows that 6.7% of the respondents
are MSC holders, 50% are B.Sc holders, 26.7% are HND
holders while 16.7% are OND holders.
Question 5: How long have you been with the company?
Options Responses PercentagesBelow 5 years 13 21.7%5 – 10 years 25 41.7%11 – 15 years 14 23.5%11 and above 8 13.3%Total 60 100%
The table indicates that 21.7% of the respondents
have been with the company for under 5 years, 41.7%
between 5 and 10 years, 23.5% between 11 and 15 years
and 13.3% have been with this company for over 16
years.
Section B
106
Question 6: Are the insurance intermediaries performing up to
expectation on their role to assisting the insuring public?
Options Responses PercentagesYes 36 60%No 24 40%Total 60 100%
The table above show that 60% of the respondents
accept that this insurance intermediaries are
performing up to expectation on their role to the
insuring public, while 40% disagree.
Question 7: Have intermediaries assisted in claims settlement
procedure.
Options Responses PercentagesYes 35 58.3%No 25 41.7%Total 60 100%
From the table above, 58.3% of the respondents
admitted that there are mispresentations by the brokers
in a bid to secure this settlement of claim.
Question 8: The non-remittances of premium collected by brokers
result to the insurance companies denying liability to the doubt in
the event of loss.
ResponsesOptions SA AG DA INDExecutive 6 2 0 0
107
Managers 8 2 0 0Supervisors
10 2 2 2
Clerks 12 10 2 2Total 36 16 4 4Responses 60% 26.7% 6.7% 6.7%
The table shows that 60% of the respondents
strongly agreed that the non-remittance of premium
collected by brokers result to the insurance companies
denying to the client in the event of loss, 26.7%
agreed, 6.7% disagreed, while 6.7% were indifferent.
Question 9: Do insurance intermediaries in Nigeria assisted
insurers in the development of products/services for the insuring
publics?
Options Responses PercentagesYes 50 83.3%No 10 16.7%Total 60 100%
From the above table, we can see that 83.3% of the
respondents admitted that insurance intermediaries in
Nigeria assisted insurers in the development of
108
products/services for the insuring publics, while 16.7%
said No.
Question 10: Does the dearth of professionally qualified personnel
affect adversely the need to exercise due care in the discharge of
their duties?
Options Responses PercentagesYes 42 70%No 18 30%Total 60 100%
The table shows that 70% agrees that the dearth of
professionally qualified personnel affect adversely the
need to exercise due care in the discharge of their
duties, while 30% due not agree.
Question 11: The rate cutting by the broker affect this premium
income of the insurance company.
ResponsesOptions SA AG DA IND
5 0 0 08 2 0 013 6 0 2
109
16 8 2 4Total 36 16 2 6Response 60% 26.7% 3.3% 10%
The table shows that 60% of the respondents
strongly agreed that the rate cutting by the broker
affect the premium income of the insurance company,
26.7% agreed, 3.3% disagreed, 10% were indifferent.
Question 12: Do the insurance intermediaries in Nigeria
contributed towards the distribution of insurance services in Nigeria?
Options Responses PercentagesYes 37 61.7%No 23 38.3%Total 60 100%
The table shows that 61.7% of the respondents
agreed that the insurance intermediaries in Nigeria
contributed towards the distribution of insurance
services in Nigeria, while 38.3% disagreed.
Question 13: Is there any mispresentation by the brokers in a bid
to secure the settlement of claims?
Options Responses Percentages
110
Yes 33 55%No 27 45%Total 60 100%
The table above shows that 55% of the respondents
agree, while 45% disagreed.
4.3 ANALYSIS OF DATA
Key = Sa = Strongly Agree, AG = Agreed, DA =
Disagreed, IND = Indifferent.
Test of Hypothesis I
H0: Non-remittance of premium collected by broker does
not result in the insurance companies denying
liability to the insured in the event of loss.
H1: Non-remittance of premium collected by broker
resulted in the insurance companies denying
liability to the insured in the event of loss.
The above hypothesis will be tested using data taken from question 8.
RANK/TREATMENT RESPONSE/REPLICATIONSSA AG DA IND SUM MEAN
111
Executive 6 2 0 0 8 2Managers 8 2 0 0 10 2.5Supervisors 10 2 2 2 16 4Clerks 12 10 2 2 26 6.5Total 36 16 4 4 60Mean rate 9 4 1 1 15
RESPONSE RATE
36 100X = 60%
60 1
16 100X = 26.6%
60 1
16 100X = 6.7%
60 1
4 100X = 6.7%
60 1
1. Correction C = ( x ∑ 2ij)
60
112
= 602 = 360
16 16
C = 225
2. Total sum squared = ( x 2ij) – C
Row 1 = 62 + 2+22 = 36 + 4 = 40
Row 2 = 82 + 22 = 64 + 4 = 68
Row 3 = 102 + 22 + 22 + 22 = 100 + 4 + 4 + 4 = 112
Row 4 = 122 + 102 + 22 + 22 = 144 + 100 + 4 + 4 =
252
TSS = ( x 2ij) – C
= 40 + 68 + 112 + 252 – 225
= 472 – 225= 247
3. Treatment A = X12 + X2
2 + X32 .... Xa
2 - Ca
= 82 + 102 + 162 + 262 - 225 4
= 64 + 100 + 256 + 676 - 2254
113
= 1096 _ 225 4
= 274 – 225= 49
4. Replication B = X12 + X2
2 + .... Xb2 - C
b
= 362 + 162 + 42 + 42 - 225 4
= 1296 + 256 + 16 + 16 - 2254
= 1584 _ 225 4
= 396 – 225= 171
5. Residential D = Total - Treatment –
Replication
= 247 – 49 – 171
= 27
ANOVA Table
114
Sources of
Variation
DF SS MS F-Ration
Treatment 4-1=3 A 49 16.3Replication 4-1=3 B 171 57.7 5.43Residual 3x3=9 D 27 3Total 15 247 76.30
Fcal = A/(a-1)
D/(a-1) (b-1)
= 16.3
3
= 5.43
Ftab = F (a-1), (a-1) (b-1),
= F (4-1), (4-1) (4-1), 5%
= F 3, 9, 0.05 = 3.86
115
Acceptance Region Rejection Region
PCF
03.86 5.43
DECISION
Since the Fcal is grated than the Ftab, the Null
hypothesis is rejected and its alternative accepted.
This means that the non-remittance of premium collected
by broker resulted in the insurance companies denying
liability to the insured in the event of loss.
TEST OF HYPOTHESIS II
H0 : Rate-cutting by the broker does not affect the
premium income of the insurance company.
H1 : Rate-cutting by the broker affect the premium
income of the insurance company.
The above hypothesis will be tested using data taken from question 11
RANK/TREATMENT RESPONSE / REPLICATIONSA AG DA IND SUM MEAN
Executive 5 6 6 0 5 1.25Managers 8 2 6 0 10 2.5Supervisors 13 6 0 2 21 5.25
116
Clerks 10 8 2 4 24 6Sum 36 16 2 6 60Mean rate 9 4 0.5 1.5 15
Response rate
36 X 100
60 1 = 60%
16 X 100
60 1 = 26%
2 X 100
60 1 = 3.3%
6 X 100
60 1 = 10%
1. Correction C = ( X =2ij)
Ab
602 X 3600
16 16 C = 225
2. Total sum squared= ( x 2ij) – C
117
Row 1 = 52 = 25
Row 2 = 82 + 22 = 64 + 4 = 68
Row 3 = 132 + 62 + 22 = 169 + 36 + 4 =
209
Row 4 = 102 + 82 + 22 + 42 = 100 + 64 + 4 + 16 =
184
TSS = ( x 2ij) – C
= 25 + 68 + 209 + 284 – 225
= 486 – 225= 261
3. Treatment A = X12 + X2
2 + X32 .... Xa
2 - Ca
= 52 + 102 + 212 + 242 - C 4
= 25 + 100 + 441 + 576 - 2254
= 1141 _ 225 4
= 285.5 – 225A = 60.5
118
4. Replication B = X12 + X2
2 + .... Xb2 - C
b
= 362 + 162 + 22 + 62 - C 4
= 1296 + 256 + 4 + 136 - 2254
= 1592 _ 225 4
= 398 – 225B = 173
5. Residential D = Total - Treatment –
Replication
= 261 – 60.5 – 173
D = 27.5
ANOVA Table
Sources of
Variation
DF SS MS F-Ration
Treatment 4-1=3 A = 60.5 20.17Replication 4-1=3 B = 173 57.7 6.61Residual 3x3=9 D = 27.5 3.05Total 15 247 76.30
119
Fcal = A/(a-1)
D/(a-1) (b-1)
= 20.17
3.05 = 6.61
Ftab = F (a-1), (a-1) (b-1),
= F (4-1), (4-1) (4-1), 5%
= F 3, 9, 0.05 = 3.86
DECISION
120
Acceptance Region Rejection Region
PCF
03.86 6.61
Since the Fcal is greater than the Ftab, the Null
hypothesis is rejected and its alternative accepted.
This means that the rate-cutting by the brokers affects
the premium income of the insurance company.
121
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATION
5.0 INTRODUCTION
This is the concluding chapter of this research
work, the study of the contributions of insurance
intermediaries to the insurance industry in which
summary, conclusion and recommendation were proffered.
5.1 SUMMARY
This research work is organized in five chapters.
In chapter one, the researcher discussed the background
study of Industrial and General Insurance Plc (IGI) and
American Insurance International Company (AIICO). The
history and organizational structures of the two
companies were fully discussed. In the course of
carrying out the research work, the researcher
identified the following problems that insurance
122
intermediaries have created in selling insurance
services in Nigeria.
Non-remittance of premium collected by brokers
invariably result in this insurance companies
denying liability to the client in the event of
loss occurring.
Dearth of professionally qualified personnel
affecting adversely thee need to exercise due care
in the discharge o their duties.
In a bid to secure settlement of claim there is
misrepresentation of issue by the brokers.
Rate cutting by the broker affecting the premium
income of the insurance company.
The unprofessional conduct of insurance brokers.
Having identified the problems, the researcher
formulated the following hypothesis:
Hypothesis I
123
H0: Non-remittance of premium collected by broker does
not result in the insurance companies denying
liability to the insured in the event of loss.
H1: Non-remittance of premium collected by broker
resulted in the insurance companies denying
liability to the insured in the evnt of loss.
Hypothesis II
H0: Rate-cutting by the broker does not affect the
premium income off the insurance company.
H1: Rate-cutting by the brokers affects the premium
income of the insurance company.
In chapter two, the researcher reviewed numerous
literacy materials such as textbooks, journal,
newspaper, written projects as well as various
legislation etc. The historical development of
insurance in Nigeria, incorporation and registration,
regulations and insurance companies Act 1961 and 1964
124
were fully discussed. The fundamental principle of
insurance as it relate to insurance intermediaries,
classification of insurance intermediaries, regulatory
bodies of brokers, roles of insurance intermediaries in
Nigeria and also the problems created by intermediaries
in selling insurance services were also fully
discussed.
In chapter three, the research methodology, The
researcher used the Yaro Yamen formular (n=N (e)2) in
determining the sample size. The simple percentage and
the two way ANOVA was fully highlighted. The source of
data collected was examined which is the primary and
secondary methods of data collection. The population of
the study comprised of the various branches of
Industrial and General Insurance (IGI) and American
Insurance International Company (AIICO) in Owerri, Port
Harcourt and Enugu respectively. A total of 65
125
questionnaires were distributed and 60 were returned
duly completed which shows 92.31% success.
In chapter four, presentation and analysis of
data, the researcher used the simple percentage and the
two-way analysis of variance (ANOVA) statistical
techniques. The simple percentage was used to determine
the basis questions such as sex, marital status, age,
qualifications etc.
The two-way ANOVA table was used to test the
hypothesis.
Hypothesis I
H0: Non-remittance of premium collected by broker does
not result in the insurance companies denying
liability to the insured in the event of loss.
H1: Non-remittance of premium collected by broker
resulted in the insurance companies denying
liability to the insured in the event of loss.
126
Hypothesis I tested by the researcher showed that
60% strongly agreed, 26.6% agreed, 6.7% disagreed and
6.7% indifferent. The correction C is 225, the Total
Sum Squared (TSS) is 247, the replication B = 171, the
treatment A = 49 and the residual D = 27.
The f-calculated is 5.43 and the f-tabulated is
3.86. the f-calculated is greater than the f-tabulated
(5.43 > 3.86) as a result the researcher rejected the
Null hypothesis (H0) Non-remittance of premium
collected by broker does not result in the insurance
companies denying liability to the insured of loss and
accepted the Alternative (H1) Non-remittance of premium
collected by broker result in the insurance companies
denying liability to insured in the event of loss.
Hypothesis II
H0: Rate-cutting by the broker does not affect the
premium income of the insurance company.
127
H1: Rate-cutting by the brokers affects the premium
income of the insurance company.
Hypothesis II tested showed a responses rate of
60% strongly agreed, 26.7% agreed 3.3% disagreed, 10%
indifferent, the correction C is 225. Total Sum Squared
(TSS) is 261, Treatment A is 60.5, Replication B 173
and the Residual D is 27.5.
The F-calculated is 6.61 which is greater than the
F-tabulated 3.86, (6.61 > 3.86), the result led the
researcher to reject the null hypothesis (H0) which is
the rate-cutting by the broker does not affect the
premium income of the insurance company and accepted
the Alternative (H1) the rare-cutting by the broker
affect the premium income of the insurance company.
5.2 CONCLUSION
The researcher identified problems and formulated
two hypotheses:
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Hypothesis I tested showed that the non-remittance of
premium collected by broker resulted in the insurance
companies denying liability to the insured in the event
of loss due to the f-calculated 5.43 is greater than
the f-tabulated (5.43 > 3.86).
Hypothesis II tested showed that the rate cutting
by the brokers affects the premium income of the
insurance company due to the f-calculated 6.61 is
greater than the f-tabulated (6.61 > 3.86).
Also the following conclusions were drawn from the
percentage method.
1.The insurance intermediaries are performing up to
expectation on the role to assisting the insuring
publics.
2.The intermediaries have assisted in claims
settlement procedure.
129
3.The dearth of professionally qualified personnel
affect adversely the need to exercise due care in
the discharge of their duties.
4.The insurance intermediaries in Nigeria assisted
insurers in the development of products/services
for the insuring publics.
5.There is misrepresentation by the brokers in a bid
to secure the settlement of claims.
5.3 RECOMMENDATION
Having identified the crucial role played by the
Nigeria insurance intermediaries and the problems
created by them in the selling of insurance services;
however, the researcher therefore proffered the
following recommendation for the way forward.
130
1.The law gives insurance brokers 30 days to remit
premiums collected by them. The number of days
should be reduced to 15 days.
2.They should be professionally qualified and skill
personnel in order to exercise due care in the
discharges of their duties.
3.They should present issues or information reliable
to the risk that they cover.
4.The insurance intermediaries should be penalised
for premium rate cutting as this can affect
premium income of the insurance company.
5.The insurance intermediaries should simplify their
procedure by asking relevant questions. All
relevant questions should be precise and concise.
6.Awards should be given to insurance intermediaries
who discharge their duties effectively as this will
encourage them to keep in the good work and work
harder.
131
BIBLIOGRAPHY
Anual Journal (2001).
Anyanwu, A. (2000). Research Methodology in Business and Social
Science, Canan Publishers Nigeria Ltd, Owerri.
Daily Champion (2010:17).
Kelechi, S. O. (2008). Research Methodology for
business, Onitsha, Kawriz and Manilas
Publications.
Ojukwu, (2006:). Modern Insurance Law and Practice in
Nigeria Sel-Bez Company Ltd.
Ojukwu, (2011). Modern Insurance Law and Practice in
Nigeria Sel-Bez Company Ltd.
www.ciab.com/pfd
www.efiua.org.ng
132
QUESTIONNAIRE I
Department of Insurance and Actuarial
Science
Imo State University,
P.M.B, 2000
Owerri.
Dear Sir/Madam
REQUEST TO FILL IN QUESTIONNAIRE
I am a final year student of the aforementioned
University and I am currently carrying out a research
on the topic; the study of the contributions of
insurance intermediaries in insurance industry in
Nigeria. I request your honest response to the
following question to enable me accomplish the study.
I promise to preserve the identity of the respondent
and use their responses strictly for academic purpose
only.
Your co-operation will be most helpful and very much
appreciated.
134
QUESTIONNAIRE II
INSTRUCTION: Please tick () in the boxes provided for
the most appropriate answers.
PART A: PERSONAL DATA
1. What is your gender? (a) Male (b) Female
2. What is your age bracket?
(a) 28 – 38 years (b) 39 – 49 years (c)
50-60 years
3. What is your marital status? (a) Single (b)
Married
4. What is your qualification? (a) Msc (b) B.Sc
(c) HND (d) OND
5. How long have you been with the company?
(a) Below 5 years (b) 5 -10 years
(c) 11-15 years (d) 11 and above
PART B
136
6. Are the insurance intermediaries performing up to
expectation on their role to assisting the insuring
public?
(a) Yes (b) No
7. Have intermediaries assisted in claims settlement
procedure?
(a) Yes (b) No
8. The non-remittance of premium collected by brokers
result to the insurance companies denying liability
to the client in the event of loss?
(a) Strongly agree (b) Agree (c)
Disagree
(d) Indifferent
9. Do insurance intermediaries in Nigeria assisted
insurers in the development of products/services for
the insuring publics?
(a) Yes (b) No
10. Does the dearth of professionally qualified
personnel affect adversely the need to exercise due
care in the discharge of their duties?
137
(a) Yes (b) No
11. The rate-cutting by the broker affect the premium
income of the insurance company.
(a) Strongly agree (b) Agree (c) Disagree
(d) Indifferent
12. Do the insurance intermediaries in Nigeria
contributed towards the distribution of insurance
services in Nigeria?
(a) Yes (b) No
13. Is there any misrepresentation by the brokers in a
bid to secure the settlement of claims?
(a) Yes (b) No
138
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