Prior to insurance business in early Nigeria, the Nigeria communities has forms of features of insurance – The most prominent among them were the extended family system, the age grade association and they provide some kind of insurance covers to their member especially during adverse period. For example, if the house of a member of an extended family is burnt the members of the family will help to get the house restored, this they may do by rending free services in form of labour of financial contributions. The cultural association, are not suitable for a modern economy, because they act only on moral grounds. This gave risk to the need for modern insurance business which is more organized, so that it can operate efficiently on commercial basis for the benefit of the insuring public.
Insurance business was therefore introduced into Nigeria in 20th century by the early British merchant who has the intention of covering certain losses that will arise from their trade activities. And the first insurance company to have a full branch in Nigeria was the “royal exchange assurance company limited” which established its first office in Lagos in the year 1921, this company to commence fall –scale insurance operations in Nigeria and they dominated insurance operation in Nigeria until 1949, when three other British insurance companies were established, namely, the tobacco insurance companies limited, the legal and general assurance society limited and the Norwich union fire insurance society ( now merged with guinea insurance company limited ) it was not until 1958 that African insurance company limited which had indigenous participation in its ownership was founded.
Though, from 1958 until 1960, most of the technical aspects of the operation of the insurance institution were handed by foreigners. This was because the insurance companies in Nigeria were branches to foreign insurance company abroad. There were about 25 insurance companies operating in Nigeria as at 1960. This increased to about 50companies as at 1975. This was due to more involvement of the government and individuals, who become part owners of insurance companies in Nigeria. As at 1991, it has increased to about 130 insurance companies and many more insurance companies have seen established lately.
Insurance companies play major roles in the development and growth of the following section of the economy.
A, BANKING INSTITUTIONS: the insurance companies have played very vital roles in the development of banking institutions. This they have done in various ways like the various functions performed by NDIC. The banks also insist on the loans they give to their customers to be insured, so that in the event of any loss they will not lose. These functions of the insurance institution had helped the banks because most distressed banks are due to loans which they are unable to recover (Bad debts).
B,INDIVIDUAL: the insurance institution have helped the individual ( in various ways, individual who has an insurance cover for his business can invest more of his money into the business hence he/she knows that in the event of any loss that the insurance company will indemnify him/ her, therefore insurance stimulates business activities. Insurance also rescues confidence in an individual, since the individual I have a life policy which his dependants will depend on in the event of his premature death.
C.PUBLIC: the role of insurance in economic development has benefited the public as a whole immensely. The public had almost lost their faith in indigenous banks, they dread depositing their money with these banks. This act almost caused a total failure of indigenous banks, but the establishment of NDIC restored the confidence in the public to deposit with these banks.
D, TO NIGERIA AS A WHOLE: insurance cannot be side stepped in the economic development of this nation as whole. This can be seen from the various contribution of the insurance industry through the investment of their premium fund. Like the establishment of Nicon Noga Hilton in Abuja. Also, the cover provided by insurance companies against fire on government economic waste.
DIFFERENT CLASSES OF INSURANCE AND THEIR CONTRIBUTION IN ECONOMIC DEVELOPMENT
Through when insurance is classified, it can be done in many ways and this ways may include classification by the main classes of business, by the function if performs and it’s under the insurance companies acts. These classes of insurance may include:
A, LIFE ASSURANCE / INSURANCE:
In this class of insurance the word “assurance” is normally used because this class of insurance has to do with life. I.e. it is insuring life and for some know that the risk of life is bound to occurs, the only questing at state is the time which it will occur.
B, MARINE AND AVIATION INSURANCE: the marine insurance is concerned with the insurance of ship freight and cargo against marine risk while aviation insurance is the insurance of aircraft the cargo they carry and the operator legal liability for damage to third party property and injury to passengers.
C, FIRE/ INSURANCE: a fire policy covers the policy holder against loss of or damage to the insured property, resulting from an accidental fire. The main risk insured against is fire, but in recent years the scope of insurance within fire department has extended a great deal. These days many special Paris some quota unrelated to a fire are covered on payment of an extra premium.
D, MOTOR INSURANCE:
In terms of premium income, motor insurance is the largest section of the whole industry, but this dose not imply that it is the most profitable as most of this vas premium is drained up by claims and management expenses. The nation acknowledge the importance of motor insurance, this is why it had been made compulsory that every motor owner must have at lest one of the various types of insurance cover in motor insurance, this is the main reason why the motor insurance collect the highest amount of premium income them other insurance classes.
E, FIDELITY GUARANTEE INSURANCE:
Under this type of insurance an employer is given an indemnity against loss of money or stock by the found or default of these employees named in the policy. These types of cover are normally taken for employee who handles the company’s money stock or other valuables.
F, RESEARCH ACCOUNT INSURANCE:
Personal accident insurance reimburses the insured for loss of earning or cost (e.g. medical expenses) resulting form an accident under a personal accident policy are usually classified into death, loss of limb or limbs, permanent total disablement, temporary total disablement and temporary partial disablement.
G, EMPLOYEES LIABILITY INSURANCE:
This class of insurance provides indemnity to employers against their liability to employees for personal injuries sustained or diseases can acted in the course of their employment. To be entitled to a claim, the employee need not to establish negligence by this employer, also the employer can no longer taken advantage of the follow servant rules, through which the could refuse liability by merely providing that the accident was partially attributable to the negligence of a fellow employee of the inquired or diseased party. E.t.c.