THE INVESTMENT OF INSURANCE FUND IN NIGERIA (A STUDY OF UNION ASSURANCE COMPANY)
Investment can be defined as management of policy holders fund and assets of the company for further benefit guaranteed. The objective of investment is to put ones available fund to use or land it to otherwise in the hope of earning income or returned dividend. The information for the study was collected using primary and secondary methods of data collection. For a primary data collection, while existing literature relevant to the topic was consulted for the secondary data. The research used chi-square statistical model to analyze the data. Two major findings were made: three major recommendation were proffered. That the investment of the prudent investment decision. Recommendation that the company should not invest in new company because they do not have financial data. The insurance decree should be reviewed and free hand been given to the insurance investment managers to inflation.
TABLE OF CONTENTS
1.1 Background of the Study
1.2 Statement of the Problem
1.3 Objective of the Study
1.4 Research Question
1.5 Research Hypothesis
1.6 Significance of the Study
1.7 Scope and Limitations of the Study
1.8 Definition of the Terms
REVIEW OF RELATED LITERATURES
2.1 An Overview
2.2 The history of Insurance in Nigeria
2.3 The development of Insurance in Nigeria
2.4 The growth of insurance investment
2.5 Federal government regulation on the investment
of insurance fund.
2.6 Meaning and Need of fund investment
2.7 Difference in premium assets and investment
2.8 Problems of investment of insurance fund
2.9 Some way of mitigating the problem
2.10Principle of investment
2.11Investment Decision Making
2.12Importance of Investment management
2.13Investment regulation and management
RESEARCH METHODOLOGY AND DESIGN
3.1 An Overview
3.2 Source of Data
3.2.1 Primary data
3.2.2 Secondary data
3.3 Population of the Study
3.4 Sample size and Sampling Techniques
3.5 Instrument used in Selecting sample size
3.6 Validity and Reliability of the Instrument used.
3.7 Method of data Presentation and Analysis
DATA PRESENTATION ANALYSIS, DISCUSSION OF FINDING
4.1 An overview
4.2 Data presentation
4.3 Data Analysis
4.4 Testing of Hypothesis
4.5 Discussion of Findings
5.1 Summary of Findings
5.4 Suggestions for Further Studies
1.1 Background of the Study
Investment can be defined as management of policy holders fund and assets of the company for further benefits guaranteed. In the contract however, according to the oxford Advanced learner’s dictionary 6th edition investment is defined as the act of investing money in something. The objectives of investment is to put ones available funds to use or land it to others in the hope of earning income or return of dividend.
The security exchanged for investment must be considered good enough to ensure the safety of the capital investment. Therefore, the investment behaviour of insurance is an attempt to maximize portfolio returns. The insurance company obligations are two types namely: outstanding claims, or loss reserves this necessitates the need to invest insurance company fund in order to meet this obligation and also to increase income. For the purpose of this study there are two categories of insurance business.
· Long term business consists of life business while
· Short term business consist of non life business. The investment principles and practice in long term business are as follows earned other them the policy period. Life fund is dependent on the investment income for the solvency of the business. Investment policy is as important as underwriting policy. Since investment is usually on long-term bases the effect of inflation is some how taken care of. But in short –term investment, the contract is usually annual and there is loss in building up fund. An investment income is not account in accessing premium income is not constantly reliable, catastrophic risk is ever present and during depression. The claims ratio is increased.
However, having know that the purpose of investment of insurance fund is to put available fund of others into use or lend it to others with the aim of making profit or dividend.
1.2 Statement of Problem
The following challenges led to this research work, they are:
· Poor pattern of investment in Union Assurance company.
· Lack of prudent investment decision by the management of the company.
· Lack of development capital market and excessive administrative expenditure.
· Low income and poor maximization in the company.
1.3 Objective of the Study
The aim of this research work is to evaluate the investment of insurance funds in Nigeria with particular reference to Union Assurance Company, the specific objectives of this research work and listed below.
· To evaluate the pattern of investment in Union Assurance Company in the past.
· To know how far the organization achieved management efficiency due prudent investment decision.
· To examine the state of development of the capital market and the administrative expenditure.
· To examine the reason behind the state of low income and poor profit maximization in the company.
1.4 Research Question
The following research question were formulated by the researcher.
· Is the pattern of the investment of the company poor?
· To what extent has the company suffered due to lack of prudent investment decision?
· Is the capital market of the country under developed?
· Are there low income and poor profit maximization in identified the company on the income of the organization.
1.5 Research Hypothesis
The following formulated by the research are as follows:
The investment pattern in Union Assurance Company is not poor.
Hi: The company is suffering from poor prudent investment decision.
Ho: The capital market of the country is not underdeveloped investment of insurance companies fund.
Hi: The capital market of the country is underdeveloped.
1.6 SIGNIFICANCE OF THE STUDY
This research work will be of immense help to:
It will help the research to know more on the investment of insurance fund in Nigeria.
The Stake Holders
This study will be of great help to the stake holders as it will enrich their knowledge on the investment behaviour to insurance and how insurance fund effects investment.
The Insurance Company
This will equally help the insurance companies and financial institutions in Nigeria because when they abide by recommendations provided by the researcher it will help then in time of financial crisis.
The Country At Large
This study will be of a great importance to the country Nigeria as it will help the policy makers to promulgate laws that will guide insurance contracts in Nigeria.
1.7 Scope and Limitation of the Study
Scope of the Study
The area of this research work is Union Assurance Company located at Enugu state and the study is on the investment of insurance funds in Nigeria.
The researcher in carrying out this study encountered numerous problems which includes:
· Lack of Research materials
· Response of the Respondents
Fund: I did not have enough money to visit the company as money times as many times as required data adequately.
Time: The time aloted for the work was not enough. This is because I had to share the time with other academic works of the semesters. This made her unable to cover a lot of interesting areas but therefore limited her research work only at Enugu metropolis.
Lack Of Research Material: Lack of research materials was also one of the problems faced by the researcher in the cause of this research work.
Responses Of The Respondents
Another constraint to the researcher is that some of the respondents found it difficult to express themselves as regards the subject matter.
1.8 Definition of Terms
Insurance: Is a sage guard against risk, any device aimed at reducing the chances of loss occurring when it happens, reducing the extent of its damage and providing the affected persons with compensation is a form of insurance.
Premium: Is the consideration paid for the insurance coverage be proven the insurance service rendered.
Life Assurance: It is a contract of insurance on the life of a person. It is a contract whereby one party calls assured agrees that to some terms exception and conditions that he would pay some money on the death of life assured on the prices us maturity of the policy.
Session: This is a process of whereby insurance company give business to another insurance company business the precious maturity of the policy.
Price: This is the value charged on the services rendered expressed in monitory terms, here the price of an insurance cover is the premiums paid or charged for carrying the risk.
Broker: An intermediary who act as a go between for the sale insurance policy. Is one who introduces the business to the insurer and are paid brokerage on premium collected from the policy.
Agent: This is an intermediary who handles the sales of insurance policies between the insurer and insured on commission deductible from premium paid by policy holder.
Investment: Mean creating an avenue where income flows into the company to increase its assets. It could also be an economic activities designed to increase, maintain or improve the productive quality of the existing stock of capital.
Fund: Is a way in which the insurance industry realized their fund as well as other financial institutions.
Portfolios: List of securities and investment (stock or shares) owned by an individual or a bank etc.
Whole Life Policy: Is the policy which the insured obtains for the benefit of the beaneries. It is used as security for the policy holder family members at the event of loss of life.
Endowment Assurance: This is assurance policy which specific the sum assured to be paid the policy holder at the event of death or at the term. Endowment assurance is often used for house purchase or making saving.
Contract: Is agreement between two people the insured and insurance company.
Policy: This is a document that regulate the activities of a company.