PROBLEMS AND PROSPECTS OF EXTENDING INSURANCE SERVICES TO THE RURAL AREAS
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Problems And Prospects Of Extending Insurance Services To The Rural Areas

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PROBLEMS AND PROSPECTS OF EXTENDING INSURANCE SERVICES TO THE RURAL AREAS

(A STUDY OF OBA IN ANAMBRA STATE)

ABSTRACT

The interest to write in this particular topic “Problems and Prospect of Extending Insurance Services to the rural areas” grow out of the present significant roles of insurance industry in extending service to the rural areas. The researcher discovered that the problems facing the extension of the service to the rural area by the industry is poverty, illiteracy and geographical locations. However, the objectives was to examine whether insurance companies extends service to the rural areas or not and if not, to identify the problems and prospects in providing insurance service to the rural areas. The scope of the study was limited to Oba in Anambra state as yardstick to other rural areas in Nigeria and leadway Assistance Co. Ltd to represent other insurance companies due to lack of time. Therefore, data interpretation gave the following findings that insurance industry should provide services to the rural dwellers that apathy and ignorance for insurance service hinder the extension of service to the rural people. This findings also recommended that all the insurance companies should start extending services to the rural areas and also assist in providing social economic activities

 

 

 

 

TABLE OF CONTENTS

Title page                                                                     ii

Approval page                                                                      iii

Dedication                                                                    iv

Acknowledgment                                                           v

Abstract                                                                       vii

Table of content                                                            viii

CHAPTER ONE

1.0     INTRODUCTION

1.1               Background of the study                                      1

1.2               Statement of problem                                         3

1.3               Objective of the study                                         4

1.4               Research question                                              5

1.5               Research Hypothesis                                           5

1.6               Significance of the study                                      7

1.7               Scope and Limitation of the study                         7    

1.8                          Definition of terms                                                                                7

References                                                                                                        10

 

CHAPTER TWO

REVIEW OF RELATED LITERATURE

2.1  Historical development of insurance                          11

2.2  The role that insurance plays in the life of a nation.     12

2.3  What are the reasons for the lack of insurance culture13

2.4  Insurance in the eye of the public                             18

2.5  The task facing insurance companies                         19

2.6  Creating awareness of insurance to the rural dwellers  21

2.7  Challenges facing the insurance industry                           22

2.8  Step to create relevance insurance in the rural areas    23

2.9  Insurance policies mostly needed by the dwellers               25

2.10Problems of extending insurance services in

       the rural areas.                                                      28  

2.11Prospects facing effecting services of

       insurance to the rural areas                                      31

2.12Benefits of insurance to the rural dwellers                  32

       Reference                                                              34

CHAPTER THREE

RESEARCH METHODOLOGY AND DESIGN

3.1      Research Design                                                     35

3.2      Area of the study                                                    35

3.3      Sources of data                                                      36

3.3.1        Primary data                                                       36  

3.3.2        Secondary data                                                   36  

3.4      Population of the study                                           36  

3.5      Sample size and sample techniques                           37

3.6      Reliability of the instrument                                     38

3.7      Validation of the instrument                                     39

3.8      Method of data analysis                                           40

CHAPTER FOUR

DATA PRESENTATION AND ANALYSIS 

4.1  An overview                                                            41

4.2  Presentation and analysis of data                                41

4.3      Testing of Hypothesis                                              55

CHAPTER FIVE

5.0     Summary of findings, conclusion and recommendation              65

5.1      Summary findings                                                  65

5.2      Conclusion                                                             67

5.3      Recommendations                                                  68

Bibliography                                                           70

Appendix        i                                                             71

Appendixii                                                            72

 

CHAPTER ONE

 

INTRODUCTION

1.1     BACKGROUND OF STUDY

 

In today’s modern society, the need for extending insurance services to the rural areas by the insurance industry is of a great important. The insurance industries which part of financial institution exist for the purpose of indemnifying an insured in the case of any loss occurrence. Furthermore, the insurance industry in Nigeria and has not been accepted by its people as to take its rightful place in the nation’s economy.

 

The importance of the provision of insurance services has been recognized in modern Nigeria, through the various products offered by insurance firms, which are life assurance policies that is classified into individual life assurance, group life assurance and pension, and health insurance business while general insurance business like fire, marine, motor insurance business etc are offered to the consumers of insurance products who are individuals, social clubs, unions association etc.

However, products offered to these groups/ person(s) are for protection against losses incurred by them and keeping them in business. Similarly, it is a fact that the major problem facing the growth and development of the industry in Nigeria today is ignorance an apathy for insurance services in the country. For this purpose, business concerns which is also very peculiar to the rural dwellers who are not easily accessible due to geographical factors and lack of infrastructural facilities in the rural areas of the country.

 

Hence, the rural dwellers are mostly engaged in small medium scale activities such as subsistence forming, fishing, palm wine tapping, hunting e.t.c. which they may find difficult to buy insurance protection for their benefits against losses that might arise in the course of their daily activities.

Thus, poverty and high rate of illiteracy which is a real factor limiting against the development and growth of the industry in the rural area. In the essence, the industry should do well to solve the inherent difficulties faced by the rural dwellers in finding ways and means of taking insurance services to them at affordable prices(premium) increase their performance, efficiency and profitability by embarking on awareness campaigns and creating of good wills.  Similarly, new products should be developed to suit their needs so as to attack and stimulate participation from the rural dwellers and to settle claims as at and when due with equity, modesty and quick response without prejudice.

 

1.1  STATEMENT OF THE PROBLEMS

The following are the statement of the problems:

Rural areas do not know what is insurance; talk of insuring  their risk. Poverty and high rate of illiteracy which is a real factor against the development and growth of the industry in the rural areas, lack of trained personnel lead to the unavailability of trained personnel who would work in local areas where the prospective insured dwells. Lack of adequate infrastructure lead to the absence of transportation and communication, also affect the extension of insurance services to the rural dwellers.

Ignorance and apathy to insurance services also bring about the high level of ignorance even among the so-called educated class and the meaning of insurance which is yet to be comprehended and by extension to the rural dwellers has affected the demand for insurance.

1.2     OBJECTIVES OF THE STUDY

The objective of the study is to evaluate the performance of the Nigerian Insurance Industry in the extension of insurance services to the rural areas. The main objective of this work is to:

ü To find out whether the insurance companies extend services to the rural areas or not.

üTo find out why the insurance industry has not been accepted by the rural dwellers.

üTo evaluate the causative factors of these problems and to provide possible solutions.

üTo determine whether geographical factors and lack of infrastructural facilities affect the location of insurance companies in the rural areas.

üTo find out the reason for lack of insurance culture and to offer strategies for developing insurance culture in the rural environments.

üTo make useful recommendations based on the finding and then give possible solution to it.

ü 

 

 

1.3     RESEARCH QUESTIONS

In the cost of this research, certain research questions were generated to guide the researchers in their findings.

-Apathy and ignorance for insurance services hinder the provision of insurance services to the rural areas.

-Special packages at affordable price (premium) would attract participation from rural dwellers.

-  Poverty and illiteracy limit factors against the development and growth of the industry in the rural areas.

Geographical factors and lack of infrastructural facilities limit the extension of insurance services to the rural areas.

-Prompt payments of claims encourage the acceptance of insurance services by the rural dwellers.

 

1.4     RESEARCH OF HYPOTHESIS

The following hypotheses from the framework for carrying out the study.

 HYPOTHESIS 1

HO:  Apathy and Ignorance for insurance services do hinder the provision of services to the rural areas.

H1:  Apathy and Ignorance for insurance services do not hinder the provision of services to the rural areas.

HYPOTHESIS 2

HO:  Special packages at affordable price (Premium) would attract participation from the rural dwellers.

H1:  Special packages at affordable price (Premium) would not attract participation from the rural dwellers.

 

HYPOTHESIS 3

HO:  poverty and illiteracy is not a limiting factor against the development and growth of the industry in the rural area.

H1:  poverty and illiteracy is a limiting factor against the development and growth of the industry in the rural area.

 

HYPOTHESIS 4

HO:  geographical factors and lack of infrastructural facilities is limiting

H1:  poverty and illiteracy is a limiting factor against the development and growth of the industry in the rural area.

1.5     SIGNIFICANCE OF THE STUDY

This study will help the researcher to determine the extension of insurance services to the rural dwellers in Nigeria which will help to know whether services are actually extended or not and if not the reasons for it not being extended through this work, measures will be adopted on enhancing this services in the areas.

1.6     SCOPE AND LIMITATION OF THE STUDY

In the case of lack of time due to academic calendar of the school and inadequate finance to carry out the research works on National scale, the scope of the study will be limited to Oba, Anambra state as a yardstick to other rural areas and Lead way Assurance Co.Ltd to represent other insurance companies.

 

1.7     DEFINITION OF TERMS

1.CLAIMS SETTLEMENT:    this is a process by which the insurance companies restore the insured in the position he/she was prior to the happening of the insured events.

2.CULTURE:  this is a customs and beliefs, way of life and social organization of any society

3.DWELLERS:      This is a place mentioned where people habitats or lives.

4.INSURED:  they are the people that buy or consume insurance services.

5.INSURER:  they hold the fund contributed by the insured in return to safeguard and take care of loss incurred (i.e. the insurance company)

6.INDEMMNITY:         this is the restoring of the insured to the same financial position after a loss as he/she enjoyed immediately prior to the happening (loss)

7.INSURANCE:     it is a safeguard against risk. It could also be defined as a contract whereby one party called the insurer undertakes to return for the agreed consideration called premium to pay to another party called the insured a sum of money or its equivalents on the happening of the special event.

8.MATERIAL FACT:     this is a fact that would influence the mind of a prudent underwriter in assessing a risk.

9.POLICY FORM:         is a written evidence of insurance setting out the terms and conditions of the contract between the insurer and the insured.

10.      PERILS:is a loss occurring contingency.

11.     PROPOSAL FORM:       is like a questionnaire and it is used to elicit all the relevant material, information required by the insurer to decide on whether to accept a risk or not.

12.     RURAL AREA:       is a country side located outskirt of the urban areas.

UTMOST GOOD FAITH:       it is whereby each party to proposed to all the material fact concerning the contract

 

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