Importance Of Insurance In Nigeria

JEROME MICHAEL EBRUPHIYO Thursday, November 4, 2021 Basis



Insurance as an industry plays an important role in Nigeria economy this obvious contribution to the nations economic growth different aspects like in the area of Job opportunities, source of finance for government, public and private sector of the economy makes the study of paramount importance. Insurance provide financial support and reduce uncertainties in business and human life and also provides safety and security against particular event and cover against any sudden loss. This article will provide information on the importance of insurance in Nigeria and also provide answers to questions as regards to Insurance in Nigeria.

What Is Insurance?

In simple terms, Insurance is a contract/agreement between the proposer (Insured) and an insurance company (Insurer), in which the Insurer agrees to compensate the Insured (for a token fee known as premium), in the event of loss, damage, death or injury to them, their property or that of a third party. It is not a tangible service, it is intangible. it is regarded by some as one of the most difficult things to sell. It only becomes ‘visible’ is in the event of a loss, in which case a claim is initiated by the policyholder and it is assume that the terms of the insurance contract are upheld by the insurer. Because it is intangible, some people are reluctant to purchase it. But, insurance plays a major financial role which cannot be over emphasized.

Major Reasons why you Should Purchase an Insurance Policy

  • Helps you save money
  • Insurance is a risk transfer mechanism
  • Protection against unforeseen losses
  • Compulsory insurances
  • Insurance ‘understands’ your needs

List of Insurances that are Compulsory in Nigeria

  • Healthcare Professional Indemnity Insurance
  • It is required by law that all healthcare professionals and institutions.
  • Employers Liability Insurance
  • This law states that every business in Nigeria, employing at least 3 persons must have insurance that will compensate their workers in the event of death, injury or sickness during their employment.
  • Builders Liability Insurance
  • This insurance is for contractors and owners of building that are more than two storeys. It compensates construction workers on building suites, against death or injury.
  • Third Party Liability Insurance (Vehicle)
  • It covers against liabilities such as damage to property, death or injury of a third party as a result of the use of the insured vehicle.
  • Occupiers Liability Insurance
  • This is for owners or occupiers of public buildings, such as hotels, offices and residences
  • Employers Liability Insurance
Businesses employing at least 4 persons or more are required to have this insurance.

Tips To Know when Getting Insurance in Nigeria

1.Purchase an insurance policy if you occupy a building or have a vehicle, if you employ at least 3 people. 2.Do a proper research on the different types of insurance policies available before making your choice. 3.Confirm which compulsory insurances are applicable to you. 4. Make sure the insurance company you are buying your policies from is able to settle your claim in the event of a loss. 5. Chose a policy you can afford and which can meet your insurance needs at the same time.

Why is Insurance Important for the Economy?

It promotes economic growth. Insurance sector makes a significant impact on the overall economy by mobilizing domestic savings. Insurance also enables mitigation of losses, financial stability and promotes trade and commerce activities those results into sustainable economic growth and development.

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