CHAPTER ONE 1.1     BACKGROUND OF THE STUDY

It is common to see reports of business failing than business succeeding. Almost always, the failure or success of a business can be attributed to its management. When a business is mismanaged, it will lead to liquidation, the company will not meet their solvency margin thereby running away from their obligation as to settle claims which in turn portray ugly insurance image. However, it will also have a drastic effect on the Nigeria economy when it failed. In order to nurture the interaction, this research focus on insurance industries and how they managed life assurance premium, to know if the premium are invested as stipulated by law, how they handle claims and the beneficiaries and also how life assurance fund help in the economic development of Nigeria.

Moreover, management of life assurance fund in insurance industry relates primarily to the way the industry managed life assurance premium in order to achieve organizational goals and objectives using available fund efficiently and effectively.

However, in context to management, union assurance company limited is an associate of Union Bank of Nigeria plc, the company was registered as an insurer on November 18, 1993 and actually commences business in 1998. At the time, it was the first attempt by any bank to venture into universal banking. It therefore became the life assurance specialist’s underwriter within the same period. Recently, Union assurance is redefining those strong potentials to challenge industry management with the top five brackets. Apart from restructuring its operations, the company is diversifying and expanding at a period where competitors are contracting due to uncertain economic conditions. A new management driving change and excellence is in place and venturing into new frontiers that were uncultivated. The change in management has also brought to bear on the company’s operations, innovations which are impacting positively on the work culture in union assurance. Union assurance also has a robust investment portfolio cutting across assets in the equity, money bond and property markets totaling over N5Billion, they also employs a conservative but dynamic investment strategy geared towards increasing the company’s income and profitability.

More so, in managing life assurance funds, money is pooled together with that of other investors to create a single strong fund that provide significant investors benefits which include an instant increase in buying strength, thereby contributing towards economic development in Nigeria. However, life assurance funds are accumulated through payment made by the assured person called premium so that should death occur, prior to a specified date or upon survival at an agreed period funds would be made available from the scheme to pay whatever benefits that are due. The idea for assistance and association is not new to the Nigerian society. Various town and clan unions and social clubs have various ways of showing benevolence to their bereaved. It is customary for people to pay condolence visit and present a sympathy purse. These practices are similar to mutual life assurance.

In addition to this, there are also the long-term needs to create and sustain an enabling environment that will engender safe practice against destructive runs in managing life assurance funds, protecting and ensuring fair play among insurers in the industry.

1.2     STATEMENT OF THE PROBLEM

The relevance and functions of the insurance industry cannot be neglected. Frankly speaking the growth, the development and the survival of the economy depend largely on the industry. Effective management of fund is the secret of the rapid growth in any company. But mismanagement of these funds will not only have impact on the growth of the economy but also the economy at large.

Complex set of interrelated problems are identify as follows:

1. Mismanagement of life assurance premium which lead to liquidation.
2. Inability to invest life assurance funds in varieties of security due to lack of experts.

iii.      Ineffective investment management of life assurance fund which affect expectations of the insuring public and the growth of the industry.

1.3     PURPOSE OF THE STUDY

Having been exposed to the problems the researcher tends to achieve the following:

1. To describe the implication and suggest possible ways of managing life assurance fund.
2. To assess the factors that determines the area of investments of life assurance fund.
3. To ascertain whether life assurance funds are invested more on short-term investment than on long-term investment instruments or vice versa.
4. To promote and ensure the achievement of the expectations of the insuring public.

1.4     RESEARCH QUESTIONS

The following questions will guide the researcher in achieving the set objectives of this study:

1. What appropriate strategies can be put in place to ensure effective management of life assurance funds?
2. What factors determine the areas of investment of life assurance funds?
3. What forms of investment is life assurance funds put into most, (long-term or short-term investment instruments)?
4. What are the trend expectations of the insuring public?

1.5     RESEARCH HYPOTHESIS

H0:    Management of life assurance fund has no positive effect on the economic growth and development of Nigeria.

H1:    Management of life assurance fund has positive effect on the economic growth and development of Nigeria.

1.6     SIGNIFICANCE OF THE STUDY

This study or work will show the vital role of effective funds management on the assurance company. It will serve as a guide to life assurance companies to decide when to invest and how to invest the company’s funds to ensure growth and great dividend on the investments.

It is aimed that this study will help the insurance industry to plan, organize and control life assurance fund in order to maintain proficiency and standard in insurance practice, thereby investing life assurance fund in varieties of investments, in turn have adequate fund to settle claims which will portray good insurance image and brings development in Nigeria economy.

It will also aid the candidate or student having ND in insurance to know the various areas where insurance can invest.

Finally, the research work will serve usefully as a tool for companies, insurance sectors and the general public.

1.7     SCOPE OF THE STUDY

The scope of the study is limited to how management of life assurance investment funds affects the activities of assurer.

Knowing that management of funds create impacts and growth to Life Assurance Company and to the economy at large, it’s the focus of this study to reveal the extent of this impact.

Thus, the scope of the study will not exceed the life assurance view of management of funds and to identify if the impact is negative or positive.

The geographical scope of this research work limit to one of the insurance companies in Enugu, Union Assurance Company of Nigeria.

1.8     LIMITATION OF THE STUDY

There is no research work without limitations, despite the explicit and brilliant work intents for this research work, certain factors however, limits the original aims intended.

There are lots of constraints in the gathering of information of this research work but the major constrains are as follows:

1. Time: In report to the theoretical and practical work the time allowed for project was limited besides there was carried out with other academic assessments.
2. Finance: Due to high rate of academic fees, I could not be able to carry out research with easy as I was planned.

1.9     DEFINITION OF THE TERMS

MANAGEMENT:         This is the act of running and controlling a business or similar organization so as to achieve the organizational goal.

LIFE ASSURANCE:     Is the contract between the assured and the assurer whereby the assurer in consideration of a premium undertakes to pay a certain sum of money either on the death of life assured or on the expiry of the fixed period.

INSURANCE:      Is a contact between two parties insured and insurer whereby the insured pay small amount of money called premium and the insurer promise to compensate the insured when the specified risk insured against occur.

LIFE ASSURANCE FUND:   An amount of money from which life assurance payments are made and with which an insurance company makes investments.

PREMIUM:          Is the monetary consideration paid by the insured for instance cover.

MISMANAGEMENT:   To organize or control a business badly.

INVESTMENT:   To put money, effort, time into something to make a profit or get an advantage.