THE IMPACT OF PROPER UNDERWRITING IN PROMOTING INSURANCE IMAGE IN NIGERIA (A STUDY OF NIGER INSURANCE PLC)

CHAPTER ONE

INTRODUCTION

1.1    BACKGROUND OF THE STUDY

Insurance companies are legal entities that cover the financial impact of it that derives from the occurrence of certain unexpected insured events affecting the insured. They offer this benefit in exchange for payment of a predetermined amount of money called premium. By pulling similar risks together insurance companies transform the unpredictability of the occurrence of an event to an individual into expected events affecting any one of the insured participants. In underwriting insured risks, insurance companies do accepts risks that have different risk profile but the acceptance of those risks are under different conditions, like charging an extra premium, applying exclusions or waiting periods to restore the necessary risk homogeneity in the portfolio. There are also problems in carryout these activities because of low modern technology and facilities in place to enhance underwriting process, lack of professionals in underwriting department of insurance industry which brought to foe low confidence on investors who want to invest. This study therefore is exploratory study to determine the impact of proper underwriting in promoting insurance image in Nigeria.

However, Niger insurance underwriters have developed a sense to assess the anti-section effect in the process of assessing the risk they use two important considerations when assessing a risk, the physical risk is related to the physical characteristics of the insured object that may increase the possibility of a claim. On the other hand, the moral risk is related to the applicants’ reputation, financial position or criminal record. When underwriters evaluate applications for insurance they follow a very thorough thought process to identify the moral and the physical risk. In promoting insurance image in Nigeria, the insured will always know more than anyone else about the perils to which their own goods, business or health are exposed to. This underwriting is performed each time an insurance application is taken. Its purpose is to determine if application represent risks acceptable to the insurer to determine whether or not the insurer will issue a policy to proposer. The central impact of the underwriting is to help the insurance company in creating homogeneous portfolio by evaluating the risks and accepting them under conditions that make them behave similarly which is geared towards promoting good insurance image.

1.2    STATEMENT OF THE PROBLEM

The following are my statement of the problems:

Poor insurance image due to lack of improper underwriting as a result of low modern technology and facilities in place to enhance underwriting process. Inadequate assessment of risk due to lack of professionals which brought to foe low confidence on the insured. Inability to provide best advice with respect to risk protection for the individual and companies looking for protection

1.3    OBJECTIVES OF THE STUDY

        The researcher tends to achieve the following:

1.        To promote insurance image and assess the factor that will enhance proper underwriting process.

2.        To describe the implication of non-professionals and to promote insured’s confidence towards insurance.

3.        To ascertain whether underwriters advice their clients looking for protection.

1.4    RESEARCH QUESTIONS

a.   What factor enhances proper underwriting process?

b.   What implication do non-professionals exhibit in the expectation of the insured?

c.   What form of advice do underwriters give to their client?

1.5    RESEARCH HYPOTHESIS

H0: Proper underwriting does not promote insurance image.     

H1: Proper underwriting  promote insurance image.

1.6    SIGNIFICANT OF THE STUDY

This work will benefit the underwriters in the sense that it would help them to assess risk in order to understand the major loopholes and challenges they will face in underwriting of risk in the service to their client.

It will also benefit the general public in order to help them to know the various risk exposure to embark upon and how to insure them effectively and efficiently.

It will also aid the candidate or student having HND in insurance who will carryout further research on the related topic in the future.

1.7 SCOPE OF THE STUDY

The study will examine the impact of proper underwriting in promoting insurance image in Nigeria. The study will be carried out in Niger Insurance PLC, Enugu State

1.8 LIMITATION OF THE STUDY

Like in every human endeavour, the researcher encountered slight constraints while carrying out the study. Insufficient funds tend to impede the efficiency of the researcher in sourcing for the relevant materials, literature, or information and in the process of data collection, which is why the researcher resorted to a limited choice of sample size. More so, the researcher simultaneously engaged in this study with other academic work. As a result, the amount of time spent on research will be reduced.

1.9          DEFINITION OF TERMS

Underwriter: The person who reviews an application for insurance and decides if the applicant is acceptable and at what premium rate.

Underwriting: The process an insurance company uses to decide whether to accept or reject an application for a policy.

Premium: The amount paid by an insured to an insurance company to obtain or maintain an insurance policy.

Policy: The contract issued by the insurance company to the insured which serves as an evidence of agreement between the insurance company and the insured.

Insured: The person or organization covered by an insurance policy.