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The Contributions Of Insurance Industry To Gross Domestic Product (gdp) In Nigeria (1985 – 2010)
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1.2 STATEMENT OT THE PROBLEM
This section of the research emphasizes on some of the challenges faced by insurance
companies in the discharge of their duties that contribute to gross domestic product (GDP).
According
to Obasi (2010), Nigerian has a negative attitude towards insurance
companies. This accounted largely for the low patronage and performance
stemmed from the poor attitude of insurers in the non claims payment.
This tradition of defaulting in claims translated to some form of bad
publicity for the industry and consequently, confidence in the industry
eroded significantly. Because of the confidence crisis of the industry,
Nigerians developed strong apathy for insurance which made the industry
pariah industry. The industry has refused to change with the times, as
policy documents still carry clauses that breeds distrust with
customers. (Obasi, 2010)
The abysmal level of insurance culture
developing economies has attracted relative interests among researches
and practitioners alike (Yusuf, Gbadamosi, and Hamadu,2009). Omar (2005)
assessed customer’s attitude towards life insurance patronage in
Nigeria and found out that there is lack of trust and confidence in the
insurance companies. Other major reason, he adduced is lake of knowledge
about life insurance products. An instructive opinion suggested by the
researchers is the call for a renewed marketing communication strategy
that should be based on creating awareness and informing the customers
of the benefit inherent in life insurance so as to reinforce the
purchasing decision.
Furthermore, Yusuf (2006) noted that religion
historically has provided a strong source of cultural opposition to
life- insurance as many religious people believe that a reliance on life
insurance results from distrust of God’s protecting care. Until the
nineteenth century, European nations condemned and banned life insurance
on religious grounds. (Yusuf, Gbadamosi and Hamadu, 2009). Some
scholars are of the opinion that religious antagonism to life insurance
still remains in several Islamic countries.
Researchers have also
proven that another major challenge of insurance industry is
unfavourable macroeconomic environment. A stable macroeconomic
environment promotes the savings necessary to finance investments, a
pre-condition for achieving viable insurance industry and sustainable
economic growth. Insurance companies are sensitive to economic
fundamentals; this means that insurance companies factor macroeconomic
variables into the amount they collect as premium and their investment
decisions in order to meet up with claims. These macroeconomic variables
include the size of the current account deficit in relation to foreign
exchange reserve, government debt, government deficits, inflation,
interest rate and exchange rates etc. Nigeria’s macroeconomic policies
over the last periodic financial indiscipline, leading to volatile and
generally high inflation, large exchange rate swings and negative real
interest rates for extended periods. Government is not sincere in
promoting a favourable macroeconomic environment that will allow the
financial service industries thrive. This will adversely affect the
operational efficiency o the insurance industry.
In spite of the following challenges facing insurance industry, the following research questions will be asked;
• What is the relationship between insurance contribution and gross domestic product (GDP) in Nigeria?
• What major challenges face the activities of insurance business in Nigeria?
•
What is the significant relationship between total investment of
insurance business and gross domestic product (GDP) in Nigeria?
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ABSRACT - [ Total Page(s): 1 ]This work examined the contributions of the insurance industry to the gross domestic product (GDP) in Nigeria. Data for the study were basically through the secondary process, extracted from journals, newspapers, internet, magazines, textbooks, CBN statistical Bulletin and Statement of Account etc. The Ordinary Least Square technique was used to test the validity of the hypotheses stated in the study. The research revealed that insurance industry through her routine activities has contributed si ... Continue reading---
