CHAPTER ONE

INTRODUCTION

1.1     BACKGROUND OF THE STUDY

Insurance can be seen from many points of view according to Hezen Ibeabuchi I. (2000) introduction to insurance, she postulate that insurance is a process of transferring a risk from one party to another. Secondly, insurance can be defined as a contract between two parties the insurer and the insured (proposer), whereby the insured pay a relative amount of money called premium to that the insurer will undertaken his risk and pay sum insured (indemnity) if the risk of the insured occur at a contracted period of time.

Thirdly, we can say that insurance is whereby the many fortunate ones compensate the few unfortunate ones. Finally, we can say that insurances is a self guide against risk.

Motor vehicle first appeared on the roads during the year 1880s and the flue first motor insurance policies were issued during the 1890s. In drawing up this new type of policies insures were influenced by their experience of fire, theft and liability insurance and as a result of that they placed more emphasis on the subject matter of the insurance (the vehicle) for rating purposes than they did up on the driver.

Nowadays, they give more weight to the driver and his experience; particularly, to the boung driver. The early bears of the twentieth century saw for formation of insurance companies in which the main emphasis was upon motor.

The experience of the theft and liability insurance influenced the development of composite companies and when motor vehicle appeared on the roads in larger number after the 1st world war, motorists offices. By the late 1920s these offices, most of which belonged to the Accident Offices Association (include within the Association of British insurer on its formation during 1985) had come to realize that their joint and several interests would best be served if they were to agree to adopt a more or less standard set of guidelines and basis rates for motor insurance.