CHAPTER ONE1.0 INTRODUCTIONLife is full of risk and every human being is confronted with possibility that one day oneof these hazards which form part of life may befall them because one financial loss orthe other. The purpose of insurance is to indemnify the victims for the financial loss theymight have suffered as a result of these risks. Risk is a concept that denotes a potentialnegative impact to an asset or some characteristic of value that may arise from somepresent process or future event. In everyday usage, “risk” is often used synonymouslywith the probability of a known loss. Paradoxically, a probable loss can be uncertainand relative in an individual event while having a certainty in the aggregate of multipleevents (see risk vs. uncertainty below). Risk is the possibility of an event occurring thatwill have an impact on the achievement of objectives. Risk is measured in terms ofimpact and likelihood.Insurance was not set out to climate and cannot soften the blow in a purely financialsense of obtaining monetary compensation to the victims thereby placing them in afinancial position.The purchasing of an insurance has been earlier describe as the insured person as apolicy holder in order to protect himself against a particular risk, take out a policy withan insured, thereby passing over the risks to the insured on a payment of a fee known aspremium.Life is associated with different kind of risk some of this risk are insurable while someare not. The insurance industry in each devices different type of insurance policy tocarter for each one to the insurance risk. The more conventual‟s, one being marine, fire,life, aviation, motor, person, accident and a lot of others.1.1 BACK GROUND OF THE STUDYInsurance as an industry did not exist in Nigeria until the later part of the twentiethcentury. However, there existed in Nigerian communities, some form of organize mutualsocial insurance schemes which had the future of modern insurance.Apart from the early social insurance scheme, insurance as an industry is relatively newin Nigeria. The first operation branch of an insurance company was open in Nigeria inLagos in 1921 by the Royal exchange assurance Plc. and it remain the only insurancecompany in Nigeria until 1949 when three British owned insurance companies wereopened up.As at the time Nigeria got her independent operating insurance as risen to twenty fiveand were mainly foreign owned. The insurance degree was prorogated to regulate theway previous legislation did not do.The insurance company In Nigeria and the insurance industry are control by the federalministry of finance another offices of director of insurance. The insurance departmentsof these ministries are responsible for the control activities of insurance companies so asto ensure compliance electrets of 1976 and other relevant regulation related to thebusiness of insurance in Nigeria.Royal Exchange assurance Plc. engage themselves in the following types of risk, theyare;- loss of profit following the insurance personal inability, trained insurance, privatecan insure motor cycle group, house holders comprehensive insurance and all kind ofrisk.Royal Exchange Insurance Nig. Plc. as many branches within Nigeria with the headoffice in Lagos and the incorporation number 6572 and the degree number that symbolsRoyal Exchange insurance his degree 58 of 1920.1.2 STATEMENT OF THE PROBLEMOwing to the negative factions surrounding the insurance industry in Nigeria, theactivities of the industry have been subjected to various criticisms of those negativefactions. We can identify good number of problems. Therefore, the statement of thisproblem of this study could be obtained based on the observation and critical analysis ofthe industry. Non payments of claims in the industry have become a faction thatnegatives the performance of the industry. Despite the factor, insurance company collectpremium from their clients.Another is the issue of inadequate capital and investment to put the company in a morefavorable condition to meet their demand of their clients.Often business organization in the country that rely on the insurance companies realizethey are in the case were they incurred losses which have been insured barely affect thebusiness.1.3 OBJECTIVE OF THE STUDYAs a general rule, there are hardly any differences between the aims and objectives ofthe insurance in Africa from those of similar ones operating elsewhere in the world. Abrief examination of the aims of a typical insurance emphasizing those features thatwould be OD special interest to the prop actors and managers of insurance company inAfrica will be useful. The objective of an insurance company may be summarized asfollows;-1. To sell insurance cover to insurance consumers.2. To settle all genuine claim family land promptly in accordance with law and beformed relevant insurance policy.3. To run business or organization in such a way that it produce a fair to theshareholders who funded that capital with which the business was established.In moving forward these basic objectives, the prop actor and managers of the insurancecompany have certain responsibility to different group and making their decision theymust bear in mind and protect the interest of each group, these groups are;-i. The policy holders.ii. The shareholders.iii. The workers and staffs.iv. The Nation and the society.1.4 SIGNIFICANCE OF THE STUDYInsurance companies form a part of the very fabric of the economy and areindispensable to it in the modern state. They are vitally necessary because they are oneof the most important vehicles for development and because of the security they give toentrepreneur, that policy holder and shareholders.The availability of insurance maximizes the entrepreneur‟s uncertainty to the extent thatsome of the risks with which he is faced with can be translated, for a fix amount calledthe „‟premium‟‟. He is to fully commit his assets to the operation of his business. Thisenables them to acquire the necessary confidence and tranquility of mind that arerequisites to fruitful risk looking.1.5 SCOPE OF THE STUDYThe researcher‟s work would have been wide in nature; however, it has restricted itselfto insurance company. Thus the study will focus and concentrate strictly on the role ofinsurance company towards the development of business enterprises. Insurance providea means for industrial and societies to cope with some of the risks faced in everyday life.Earning capacity is asses that should be protected through insurance.1.6 LIMITATIONS TO THE STUDYA research of this nature is found to have a lot of limitations. Time factor was a seriousproblem encountered; the period given for the completion of this research work wasshare along with academic, non-academic work which was necessary in relation with acompletion of school in general. The time spread to include the distribution andgathering of questionnaire from respondents which was a problem of its own entirely.Financial constraints can never be rule out in a situation like this, the money requiredfor the running around, cost of materials etc.Another limitation is that of material for the secondary data. Even though there aremany existing text books and journals of insurance nature which would have been usedfor this research work. Getting them in the library wasn‟t easy as many students areequally writing on similar topics which require the same materials.1.7 STATEMENT OF HYPOTHESISIn every study, there is an assumption on the variable of that study. This assumptiontends to predict the outcome of the study. The hypothesis of this study is to asset thefollowing;-HI: Insurance firms play a vital role in the development of nation economy.HO: Insurance firms don‟t play a meaningful role in the development of nation‟seconomy.