Insurance - SS2 Commerce Lesson Note

Definition of Insurance:

Insurance is a system that provides financial protection against potential risks and uncertainties. It involves individuals or businesses paying a premium to an insurance company in exchange for a contract, known as an insurance policy. In the event of a covered loss or damage, the insurance company compensates the policyholder, helping them recover from the financial impact of the incident.

History of Insurance in Nigeria:

The concept of insurance was introduced to Nigeria during the colonial era. In 1918, the Royal Exchange Assurance Corporation, a British insurance company, established its presence in Nigeria. This marked the beginning of the formal insurance industry in the country.

Over the years, the insurance industry in Nigeria has undergone significant growth and development. The Nigerian insurance market is regulated by the National Insurance Commission (NAICOM), which ensures the adherence to regulations, promotes professionalism, and protects the interests of policyholders.

In the early stages, insurance services in Nigeria were primarily provided by foreign insurance companies. However, in the 1960s and 1970s, several indigenous insurance companies emerged, reflecting the growing demand for insurance services among Nigerians.

The Nigerian insurance industry offers various types of insurance policies to cater to different needs and risks. These include life insurance, motor insurance, property insurance, health insurance, and liability insurance, among others. Insurance companies assess risks, set premiums based on the risk factors, and provide coverage to policyholders.

In recent years, there has been a push to increase insurance penetration in Nigeria, as the awareness of the benefits of insurance grows. The government and industry stakeholders have been working towards creating a favorable environment for insurance companies to thrive, ensuring consumer protection, and promoting financial inclusion through insurance.

Today, insurance plays a crucial role in providing individuals, businesses, and the economy with protection and stability against unforeseen events. It offers peace of mind and financial security, allowing individuals and businesses to recover and rebuild after a loss or damage.

While the insurance industry in Nigeria continues to evolve and face various challenges, such as low awareness, trust issues, and underinsurance, it remains an essential component of the country's financial landscape, providing risk mitigation and financial protection to individuals and businesses alike.