APPRAISAL TO INSURANCE POLICY IN INDIGENEOUS CONSTRUCTION COMPANIES IN NIGERIA

APPRAISAL TO INSURANCE POLICY IN INDIGENEOUS CONSTRUCTION COMPANIES IN NIGERIA

ABSTRACT

This research is carried out to appraise the insurance policy by indigenous construction companies in Nigeria, the main objective of the researcher is to give a concise analysis of the existence of their importance and the need of insurance policy in indigenous construction companies in Nigeria, The method of evaluation  used were  questionnaires administered and relevant literatures were reviewed. The finding of this research shows that deficiencies in the full implementation of the insurance policies and enforcement of the insurance act by indigenous construction and factors militating proper application of the insurance policies. It therefore recommends that the level of awareness of insurance services should be increased and government should control.

CHAPTER ONE

1.0      INTRODUCTION                                                                

1.1      BACKGROUND

Based on the appraisal of insurance policy by indigenous construction companies, they do away with anything that could breach their agreement as it is stipulated, especially things that can cause delay or abandonment of project. But never can tell, at the cause of the work in the site. The contractors can come across one problem or the other as a result of the accident, There has been a considerable interest in the concept of risk in recent years, with the perception that we live in a” risky society” for example, severe damage of mechanical plant or equipment, injury to workers, damage on constructed work and other circumstance that is beyond controls. However the need is obvious for every indigenous construction companies, to prepare themselves by registering with any of the insurance companies, in case of unforeseen circumstances like accident occurrences, damages on construction work.

The field of experience has shown that many indigenous construction companies and business organization are not aware of the relationship between indigenous construction companies and insurance companies, because of lack of information. The concept of this research is to bring out the point of emphasis on the benefit of insurance companies to indigenous construction companies. Moreover ,few construction companies among other were said to have relent in their obligatory effort to insure their, building project, properties because of in diligent attitude of insurance companies, this is because of the financial weakness of some of the insurance companies.

National insurance commission had force the insurance companies to increase their capital in other to meet up with the need of their policy holders. According to workshop held at muson centre Lagos recently, It is now mandatory for any development of project to be covered by insurance policy either small or complex project.

 DEFINITION OF TERMS

·         INSURANCE- is defined as a contract whereby an insurer agrees, in consideration of the premium paid by the insured against loss of the happening of certain events (Barley 2002)

·        PREMIUM – It’s an amount which is paid to insurance company by individual, indigenous companies to insure their properties or an amount which you pay once or regularly for an insurance policy, this amount can also be added to the basic rate.

·        INDEMNITY – is a sum paid by A to B by way of compensation for a particular loss suffered by B .can also is seen as a means of protection against damages or especially in the form of promise to pay for anything that happened. An indemnity is a kind of insurance, in which payment is made (often in previously determine amounts) for injuries suffered, not for the costs of recovery. The indemnity payment is designed not to be a dependent on anything the patient can control. From the point of view of the insurer, the indemnity mechanism avoids the moral hazard problem of victim spending too much in recovery

1.1        THE NEED OF THE STUDY

The importance of insuring properties during construction work need to be emphasized as this determine the success of a project, also the irregularities between the indigenous construction companies and the insurance policies need to be settled, now the need of the study will encourage the stake holder, the indigenous companies the need to insure their projects, properties and product, so that it will define the roles of insurance companies in any project execution in the country.

1.2      STATEMENT OF THE RESEARCH PROBLEM

The research intends to admit the following point,

·        Why do some indigenous construction companies under take project development or execution without insurance policies?

·        Why are indigenous construction companies suffering from delay in the payment of claims?

·        Frustration in the insurance business on the part of the indigenous construction companies?

·        Lack of awareness by the indigenous construction companies

1.3    AIM AND OBJECTIVES OF THE RESEARCH

1.3.1    AIM

·        The aim of this research is to appraise the benefit or importance of insurance policy to indigenous construction companies in Nigeria.

1.3. 2     OBJECTIVES

·        To identify the factors militating against proper application of insurance policies by indigenous construction companies

·         To identify the types of insurance scheme commonly operated in indigenous construction companies

·        To appraise the duties of insurance companies to indigenous construction companies.

·        To examine the existing insurance policies.

·        To assess the level of awareness of the insurance policies by indigenous construction companies

1.4       METHODOLOGY

In order to evaluate the efficiency of insurance policy to indigenous construction companies, there were review of related literature, google, site visit, internet and articles, magazines, textbooks and journals used to provide some part of this write up. Also questionnaire will be sent to organization/companies to obtain practical data on the subject matter.

1.4.1   DATA COLLECTION

These are data specifically collected by the researcher for the purpose of the report.

 Data where collected through the following sources:

-         Direct personal observation

-         Oral interview

-         Telephone conversation

-         Questionnaire

1.4.2  ANALYSIS

Statistical method that were used to analyze the data include frequency distribution and simple percentage

1.5       SCOPE AND LIMITATION

This study is limited to various insurance policies employed by indigenous construction companies in Nigeria with reference to the Jct form of contract. The research will cover Abuja FCT metropolis and it’s limited to indigenous construction companies in Nigeria.

CHAPTER TWO

LITERATURE REVIEW

2.0     INTRODUCTION

The construction industry, which is vital to growth and development, is one of the oldest in the world, indeed as old as civilization it’s self. Construction activity forecast the general direction of an economy and for these reason, the industry is often described as a leading economic sector. These indicate the significance of construction industry across generation and developmental stages.

Nigeria construction sector account for 1.4% of its GDP despite the fact that growth has been observed in the construction sector output, it contribution to total GDP has remain at abysmally low level(1) in 1981,the construction sector accounted for 5.8% of Nigeria GDP in the last three decade.

Nigeria is away below realizing its potentials in construction industry despite huge deficit in infrastructure due to the inability of the government and insurance firm to assist the indigenous construction companies, Nigeria constructions companies is dominated by foreign companies in which most of the construction work are been undertaken by expatriate. This is due to deficiencies and in capability of the indigenous companies in area of financial effectiveness, innovation, dynamism among other.

2.1      INSURANCE IN NIGERIA

Nigeria has the largest insurance market in Africa, but it weakness in the industry meant, that most of the large insurance business was under written by foreign companies. in Nigeria 104 insurance companies are under capitalized, and were given an ultimatum, to contribute to their capitalization threshold by factors of over 100%,this led to acquisition but when the dust had settle,71 stronger companies reinforced.

Following the present situation of Nigeria, banking reform come the equally through reformation of the insurance industry. presently the local and domestic industry is poised not only to penetrate deeper in the domestic market but to expand to other region of the continent, to the finance sector in Nigeria, there was an historic transformation, the 71 stronger companies had increase their capital to the required level comprised 43 non-life under writing firm,26life insurer and 2 re-insurance companies; only 51 player are left on the insurance land scape. twenty of the primary insurance companies had both general business and life portfolio, which naicom has re-certified as  distinct corporate entities in line with a requirement of the reformation programme. Since the commencement of the industry consolidation programme, there are 104 registered and four reinsurance companies.

2.2     TYPES OF INSURANCE

The insurance ACT (2003) classified the insurance business into two clauses namely:

v Life insurance

v General insurance business

a) Life insurance is divided into the following categories:

1. Individual life insurance

2. Accident insurance business

3. Workmen’s compensation insurance business

4. Good in transit insurance by road, rail, air, water

5. Motor vehicle insurance business

6. Oil and gas insurance business

7. Miscellaneous insurance business

8. Contract all risk and engineering risk insurance business

9. Credit insurance, bond and surety ship

10. Marine and aviation insurance business other than specified in paragraph of this subsection.

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