THE FIRST INSURANCE COMPANY IN NIGERIA
According to Merriam-Webster dictionary, insurance is coverage by contract whereby one party undertakes to indemnify or guarantee another against loss by a specified contingency or peril. It is simply a means of protection from financial loss. It’s a type of risk management that’s generally utilized to protect against the danger of a speculative or unpredictable loss.
The entity that provides insurance for its customers is called an ‘insurer’, the person or entity who buys insurance is known as a ‘policyholder’. In contrast, a person or entity covered under the policy is called an ‘insured’.
Another expressive definition of insurance proffered by Investopedia is a contract, represented by a policy, in which an individual or entity receives financial protection or reimbursement against losses from an insurance company. The company pools clients’ risks to make payments more affordable for the insured.
There are two broad types of insurance:
- Life Insurance
- General Insurance
Life insurance provides financial compensation in the event of death or disability. Some life insurance policies may offer financial compensation after retirement or a set amount of time. As a result, life insurance assists you in ensuring the financial stability of your family even if you are not present. When buying a life insurance policy, you can either pay in one large sum or make monthly payments to the insurer. These are known as premiums. In exchange, your insurer guarantees to pay an agreed sum to your family in the case of death, disability, or at a defined time.
Depending on what it covers, Life insurance can be classified into various types:
- Term Insurance
- Whole Life insurance
- Endowment policy
- Money-back policy
- Unit linked insurance plans
- Child plan
- Pension plans
A general insurance policy is a contract that offers financial compensation in the event of a loss other than death. Apart from life, it covers everything. A general insurance policy pays you for financial losses incurred as a result of liabilities arising from your home, automobile, motorcycle, health, travel, and other assets. The insurance company guarantees to give you a predetermined amount to cover car damage, medical treatment for health problems, theft or fire losses, and even financial difficulties while traveling.
Simply said, general insurance protects all of your belongings against loss, damage, theft, and other liabilities. It’s not the same as life insurance.
General Insurance can be classified into sub-sectors which include:
- Health insurance
- Motor Insurance
- Travel insurance
- Home insurance
- Fire insurance.
Although the crux of this article is to highlight the first insurance company in Nigeria, it is a prerequisite to mention a few insurance companies with a track record of top-notch insurance services;
- Lead Way Assurance
- Prestige Insurance LTD
- Goldlink Insurance PLC
- Mutual Benefits Assurance
- Cornerstone Insurance PLC
- African Alliance Insurance PLC
- Acen Insurance Company
- Adic Insurance
- AIICO Insurance PLC
- AXA Mansard Insurance
- Consolidated Hallmark Insurance
- NEM Insurance PLC
- Custodian and Allied Insurance
- Crusader Insurance PLC
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The insurance sector in Nigeria is quite dynamic and intriguing and this industry has evolved rapidly in the last few decades. As far back as the colonial period, insurance was introduced into Nigeria and at that time, the insurance companies were of European origin. A couple of years before the actualization of independence in Nigeria, the first insurance company in Nigeria was birthed, it was known as the African Insurance Company Limited, and it was established in 1958.
The country declared independence from the British on October 1, 1960. Nigeria had twenty-five insurance businesses at the time of independence and Nigerians owned only four of the ten. The J.C. Obande Commission report, a watershed moment in Nigerian insurance history, was published in 1961. As a result, the Nigerian Department of Insurance was established as part of the Federal Ministry of Trade.
Later, the Ministry of Finance took over this department. The Insurance Companies Act of 1961 required insurance companies to be classified into different classes in order to be registered. The office of the Registrar of Insurance was established under the Act’s requirements. The goal was to manage the country’s insurance practice. Other measures that fall under the Act’s other provisions include a minimum capital requirement and other regulations for the registration, monitoring, and control of insurance operations.
As the country became independent, European companies began to open Nigerian subsidiaries and there was a problem with the model because this incited that money was leaving the shores of Nigeria into foreign accounts and this was not helping the country’s GDP.
In response to this predicament, the Nigerian government began promoting the establishment of state-owned insurance companies, after a while, especially in the early 90s, indigenous private insurance firms began to sprout and this gradually replaced the state-owned insurance companies.
In a bid to manage both the old and new insurance companies, the Nigerian federal government began to standardize the insurance industry and this led to the formation of the National Insurance Commission in 1997.
As highlighted above, insurance is not new to the knowledge of Nigerians as it had been in operation during the colonial era. Still, only a minute percentage of the population is covered under the various types of insurance.
The National Health Insurance Commission, which was launched in 2005 has been able to record only about four million Nigerians over the past 15 years who are fully registered and insured. If this is the number for health insurance, one can only imagine the limited number of people registered under other insurance sectors.
The first insurance company in Nigeria was the African Insurance Company Limited, established in 1958. The introduction of British Trading Companies in Nigeria is strongly linked to the genesis of modern insurance, and these businesses helped the country’s interregional trade, these international corporations had to deal with some of their risks on a local level, Between the 1920s and the 1940s, Nigerian insurance companies experienced slow growth but the birth of the first Nigerian insurance company gave rise to the establishment of state-owned insurance companies, as well as private owned insurance firms.
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