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Financial resources have been considered as being a very important factor in economic development. Consequently, the mobilization of resources has been identified as crucial in achieving rapid economic growth in developing countries.

Insurance as we all know play’s a vital row in the mobilization of financial resources in the economy of any country by covering different type of risk. The services which insurance renders to industries like Agriculture, oil and gas, financial sector of the economy and some other vital sectors thus, Insurance is essential to every sector of the economy in order for it to develop.

Insurance helps individuals and organization to prosper, it help in recovering from ordinary losses help recovering from catastrophic losses and preventing losses. Through this vital row played by the insurance sector, it is of importance that laws and regulation should be put in place to guild it conducts.

There is no gainsaying that Nigeria of today is going through difficult times. The society is plagued with myriads of problems. Resources are scarce and competing for many uses. The vast majority of the populations are poverty stricken. Corruption is at its peak, many enterprises are gasping for breath. Security to life and property is being threatened daily, unemployment is on the increase. Almost everybody faces fear and uncertainties. Education is without morals, hazards and risks surround us, in a bid to makes progress, individuals and corporate bodies are taken great risk bearing in mind that uncertainty cannot be entirely eliminated, for wherever there is uncertainty, there is risk.

According to Irukwu (1998) “to try to eliminate risk in business enterprise is futile, Risk is inherent to the commitment of present resources to future expectations”. Indeed, economic progress can be defined as the ability to take greater risks. To attempt to eliminate risks, even the attempt to minimize them, can only make them irrational and unbearable. In such a situation, the simple means to mitigate risk is through insurance which gives cover to its client.

Infact, insurance involves the contribution of funds by a group of people exposed to similar risks, such that the few who may suffer losses may be compensated from the common fund. This is, of course based on the promise that not all of those that have taken insurance will suffer loss at the same time. The expertise of an insurer lies in his ability to fix an equitable contribution among members of the fund at the same time maintaining a secure and profitable fund.


The Insurance Companies consist of Life, Non-life insurance companies and those that engage in both activities. They mobilize relatively long-term funds and act as financial intermediaries. Their investment activities are mainly in the capital market, in government securities, public sector enterprises and the mortgage industry.

According to Anyanwu, (1993:190) in his brief history of Nigeria insurance industry. The first insurance company to have a full branch office in Nigeria was the Royal Exchange Assurance. It opened its first office in Lagos in 1921 and until 1949 three other British owned insurance companies entered the insurance industry in Nigeria, by the time of Independence in 1960 there was about 25 insurance companies in the country. Nwankwo (Ibid) notes a special growth in the number of insurance companies since 1949 culminating in as many as 63 companies as at March, 1973. By 1980, the number had risen to 70. In 1985, it was 87 rising to 103 in 1990, 121 in 1992 and 107 in 1993 (Akpan 1999:33).

The Nigeria Reinsurance Corporation was established in 1977 to provide insurance cover for Insurance Corporation. It was also expected to assist the government in achieving it economic and social objectives in the field of insurance and reinsurance. “All registered insurance companies in Nigeria are statutorily required to contribute 20 percent of the total sum insured to Nigeria Reinsurance Corporation” (Ekezie 2002:14).

The first insurance law was promulgated in 1961 and that in 1997, another insurance decree came into force increasing the paid-up capital of both life and general insurance to N20 million and N50 million, where the general business includes oil and gas insurance among another activities. Reinsurance has a minimum paid-up capital of N150 million (Akpan 1999:33).

The Nigerian Insurance Industry has come to the end of the tunnel and a glorious light brightens up. A new “rebirth” it has been with the mergence of 71 mega companies with a total capital base of over N200 million, the industry is set to chart a new course across the African continent. As charity begins at home, the potential sources of business in the Nigerian market must first be tapped in the Nigerian market must first be tapped to its maximum. The insurance Act, 2003 which among others, makes it compulsory for owners of public buildings above two floors to have them insured, the pension Reform Act, 2004 which among others, makes it compulsory for labour having 5 employees and above to purchase Group Life Assurance policy which compels multinational organizations to have at least 40% value of their assets insured in the Nigerian Insurance market.


To understand the subject matter, we will look at the Reforms in the Insurance sector. Also, some factors that limit the growth of the insurance sector, although the state of the economy effectively determines the nature and quality of the Insurance sub-sector.

At this point I will like to identify those factors that have render the insurance sector inefficient and what must be done to correct those unhealthy competition amongst rival industry, unfair premium rate, wars amongst underwriters, depressed incomes, unabated rise in claims profile and operating last further reduced margins to an uncomfortable level.


This study attempts to answer the following research question.

  1. To what extent as the Insurance reforms contributed to the insurance sectors?
  2. Does the reform in insurance sector raise the hope of insurance client?
  • What is the importance of the insurance reforms in Nigeria economy?
  1. What is the growth level of the Insurance sector?

The main purpose of the study is as follows:

  1. To examine the main purpose of the insurance reforms.
  2. To examine the relevance of the insurance reform to the industry.
  • To identify problems confronting the sector after the reforms.
  1. Make recommendation on the efficient management of the Insurance sector in Nigeria.

HO:   There is no significant difference at the just concluded reforms in Insurance sector in Nigeria.

H1: There is significant difference at the just concluded reforms in Insurance sector in Nigeria.


The essence of this study is to show the Evaluation of the Reforms carried out in the Insurance sector. This research work is considered to be important to:

  1. The government for policy formulation
  2. The business community for purpose of investment and capital formation.
  • The result of work will serve as a reference material for researchers.
  1. This study will enhance the knowledge of the researcher the more about the reforms.


The researcher suffers from the following limitations.

Material: It took the researcher a lot of time and effort to convene the key players in the Insurance industry about the importance of the research and it was difficult for them to give information even when they were assured that such information will be treated with strictly confidentiality and also in getting hard copy materials.

Finance: As a student, the researcher had no sufficient money to carryout the research extensively, thus the research was limited to the area of the topic.

Time: Due to time constraint, this research was not conducted extensively and as such most of the work which would have been carried out was not possible.


This study is organized into five chapters that combine to make the whole study meaningful, cohesive and complete.

Chapter one contains the introduction, statement of the problem, the research question, purpose of the study, research hypothesis, significance of the study, limitation of the study, operational definition of terms and organization of the study.

Chapter two deals with literature review and chapter three takes a look at the research methodology. Chapter four gives full analysis of the interpretation of data collected through the use of table figures to fully explain the findings. Chapter five deal with the summary, conclusion and recommendations.


Insurance: Refers to a contract to pay a premium in return for which the insurer (Insurance Company) will pay compensation in certain eventualities such as death, fire, theft, motor accident, etc.

Risk: Risk has been defined as the variation in the possible outcomes that exists in a given situation.

Premium: Refers to the fixed periodic installment paid on an insurance policy.

Insured: Refers to a person or property insured against any loss to be indemnify by the insurance company.

Insurer: refers to the insurance company that bears or carries the risk of insurance.

Capital: Refers to money invested in a business part of wealth produced in the past, which instead of being used up is kept for production of further wealth.

Policy: This is the agreement between the insurance company and the person taking the insuring policy

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