death, diagnosis of a terminal illness diagnosis of a critical illness disability due to ill health permanent disability accidental death

Insured events that may be covered by Life assurance

There are four basic life assurance contracts.

1. Term AssuranceIn this type of contract, a fixed term of years is decided upon at the ontset. The benefit i.e. sum assured is only payable if death should occur during the chosen term. Nothing is payable if the life assured survives to the end of the term. The premiums for this contract are low because the majority of term assurance contracts do not result in payment.

Types of Contracts in Life AssuranceTerm Assurance

Term Assurance policies are used to cover period in a person’s life when the consequences of an early death would be particularly serves, for example:

• When a young family is growing up• When a house mortgage or other loan is being repaid.• When an income for dependents may be required.

These requirements give rise to variations in the basics for assurance contract; for example, when a loan or mortgage is being repaid a “decreasing term assurance” may be used. In decreasing term assurance, the sum assured payable decreases each year so that it is equal to the amount of loan outstanding at any given time during the term.

Also, a decreasing term assurance may be used when an income is required on the death of a breadwinner.

Uses of Term Assurance

Meaning of Whole Life Assurance Types of Whole Life Assurance

  2. Whole Life Assurance

This type of policy guarantees the assured the sum only after the death of the life assured. The premium are always expensive due to the fact that a claim is certain

Types of Whole Life AssuranceSix types of whole life insurance policies are explain below;

1. Participating PolicyIn a participating policy (also known as a with-profits policy), the insurance company shares the excess profits called dividends or refunds or bonus with the policyholder. In this policy, the greater the success of the company's performance, the greater the dividend.

Meaning of Whole Life Assurance

2. Non-Participating PolicyUnder this policy, all values related to the policy (death benefits, cash surrender values, premiums) are usually determined at policy issue, for the life of the contract, and usually cannot be altered after issue.This means that the insurance company assumes all risk of future performance versus the actuaries' estimates. If future claims are underestimated, the insurance company makes up the difference. On the other hand, if the actuaries' estimates on future death claims are high, the insurance company will retain the difference.

3. Indeterminate PremiumIt is similar to the non-participating policy, except that the premium may vary year to year. However, the premium will never exceed the maximum premium guaranteed in the policy

Types of Whole Life Assurance (contd.)

4. Limited PayIt is similar to a participating policy, but instead of paying annual premiums for life, they are only due for a certain number of years, such as 20. The policy may also be set up to be fully paid up at a certain age, such as 65 or 80. The policy itself continues for the life of the insured.

5. Single PremiumIt is a form of limited pay, where the pay period is a single large payment up front. These policies typically have fees during early policy years should the policyholder cash it in.

Types of Whole Life Assurance (contd.)

6.Interest SensitiveThis type is fairly new, and is also known as either excess interest or current assumption whole life. The policies are a mixture of traditional whole life and universal life. Instead of using dividends to augment guaranteed cash value accumulation, the interest on the policy's cash value varies with current market conditions. Like whole life, death benefit remains constant for life. Like universal life, the premium payment might vary, but not above the maximum premium guaranteed within the policy.In a whole life assurance contract, there is no fixed term. Premiums are paid up to the date of death, when the sum assured becomes payable.The premiums charged are higher than for term assurance because claims would definitely be made on the policy.Whole life assurance is used as a means of obtaining relatively inexpensive cover and to cover the event of early death over lengthy periods.

 

Types of Whole Life Assurance (contd.)

Meaning of Endowment Policy Types of Endowment Policy

3. Endowment Assurance

An endowment policy is a life assurance contract designed to pay a lump sum after a specified term (on its “maturity”) or on earlier death. The assured takes a policy for a definite period. Typical maturities are ten, fifteen or twenty years up to a certain age limit. Some policies also pay out in the case of critical illness.Endowment assurance has a fixed term of years decided upon at the ontset. The benefit under the policy is payable either on death during the chosen term or at the end of the term if the life assured survives until then.Endowments can be cashed in early (or “surrendered”) and the holder then receives the surrender value which is determined by the insurance company depending on how long the policy has been running and how much has been paid in to it.

Meaning Of Endowment Policy

i. Traditional With Profits EndowmentsThere is an amount guaranteed to be paid out called the sum assured and this can be increased on the basis of investment performance through the addition of periodic bonuses. Regular bonuses called reversionary bonuses are guaranteed at maturity and a further non-guaranteed bonus may be paid at the end known as a terminal bonus.

ii. Full EndowmentsA full endowment is a with-profits endowment where the basic sum assured is equal to the death benefit at start of policy and, assuming growth the final payout would be much higher than the sum assured 

Types of Endowment Policy

iii Unit-linked EndowmentUnit-linked endowments are investments where the premium is invested in units of a unitized insurance fund. Units are enchased to cover the cost of the life assurance. Policyholders can often choose which funds their premiums are invested in and in what proportion. Unit prices are published on a regular basis and the encashment value of the policy is the current value of the units. This is the simplest definition.

iv Low Cost Endowment (LCE)A low cost endowment is a combination of an endowment where an estimated future growth rate will meet a target amount and a decreasing life insurance element to ensure that the target amount will be paid out as a minimum if death occurs (or a critical illness is diagnosed if included). The main purpose of a low cost endowment has been for endowment mortgages to pay off interest only mortgage at maturity or earlier death in favour of full endowment with the required premium would be much higher

Types of Endowment Policy (contd.)

Lump sum on retirement: Life assurance policy is a means of saving for the future because it provides lump sum of money on retirement.

Provides for Permanent Disability: The endowment policy makes provision for permanent disability

Serves as Collateral Security: Life assurance policy can be used as collateral for obtaining a bank loan needed to set up a business enterprise or expand an existing one.

Source of Loan Repayment: Life assurance provides loan repayment in the event of death

Provision for Old age: Life assurance can be used as a means of providing for old age by making saving for the future.

Provision for Dependant: It is useful way of providing for the welfare of the assured’s dependants after his death. For instance, endowment policies can be taken to provide for children’s education. The children concerned will receive the sum assured on their behalf upon attaining a certain age.

Means of Raising Capital: Life assurance policy can be used to raise capital to be used for a specific project in the future.

Provision for Burial Expenses: Whole life assurance can be used to provide for funeral and death expenses since the money can only be claimed after the death of the policyholder i.e the sun assured is payable only at death.

Provision of capital: It provides for the repayment of capital on a partner’s death.

General Uses of or Reasons for Life Assurance

Meaning of Accident Insurance. Branches of Accident insurance.

ACCIDENT INSURANCE

This type of insurance provides for compensation against

injuries which someone may sustain. Policies can be arranged to cover personal accidents for a particular journey, especially one involving inan aircraft.

Meaning Of Accident Insurance

Personal Accident Insurance: This branch of accident insurance provides for the payment of lump sum to the insured should he suffer loss of life, loss of eye sight etc as a result of accident.

Property Insurance: It may be taken out against all kinds of accident to property, especially burglary.

Fidelity Guarantee: This covers the risk which an employer may suffer as a result of dishonesty of an employee. Some employees like Cashier, Bursars, Accountants, Sales persons and others who handle large sum of money on behalf of their employers may embezzle the money entrusted to their care.

Branches of Accident insurance

Meaning of contract Meaning of insurance contract Nature of Insurance contract

INSURANCE CONTRACT

An insurance contract is an agreement between an insurance company and the individual effecting the insurance cover. Such an individual is referred to as the insured.It is a “legally binding agreement” made between two or more parties, by which rights are acquired by one or more to act or forbearances on the part of the other parties.

Meaning of Contract & Insurance Contract

For insurance contract to be valid, it must satisfy the under listed requirements.

 1. Offer and AcceptanceAn offer is a communication of the contract terms by one party to another. Acceptance refers to the letter’s agreement of those terms.In motor insurance contract, the offer is made by the proposer when he completes a proposal form. The insurer accepts by issuing a cover note.

 2. ConsiderationConsideration refers to the gain or benefit received by one party in return for a promise or the performance of an act of another. In an insurance contract, the consideration consists on the one hand of the insurer’s promises to compensate the insurer for a loss, and on the other hand of the premium payment by the insured, to the insurer.  

Nature of Insurance contract

3. Legal Capacity of PartiesThe two parties to the contract must have legal capacity to enter into such for it to be valid. Certain categories of persons are not qualified to enter into insurance contracts. These include persons of unsound mind and minors or infants4. Consensus and Ad-idem.The two parties must observe the principle of Utmost Good Faith. i e the two contracting parties must be of the same mind as to the contract before an agreement could be valid. The insured must disclose all the material facts to the risk and the insurer must observe the same good faith by disclosing all the terms and all the conditions of the contract.5. Legality of ObjectSubject of the contract must be legal for it to be valid. Contracts must not be illegal, that is, they are invalid if they are forbidden by statute or are against what is called public policy

Nature of Insurance contract (Contd.)

6. No MistakesThere must not be a mistake in making the contract. If one or both of the parties to a contract makes a mistake in the process of making the agreement, the effect of such a mistake depends on the nature of the error. A mistake may make the contract invalid where there is no agreement over the contract.

 7. No Misrepresentation or FraudA representation is a factual statement made by one party to the other which is intended and succeeds in persuading the latter to enter into the contract. If such a statement is false it is a misrepresentation. If misrepresentation is fraudulent, the insured party can:(i) Carry on with the contract; or(ii) He can claim damages if he has suffered a loss, and(iii) He can either refuse to perform the agreement or rescind the contract.

Nature of Insurance contract (Contd.)

 

UNIQUE HEIGHTS JUNIOR & SENIOR HIGH SCHOOL,INSURANCE THIRD TERM SCHEME OF WORK- YEAR 11

2012/2013 ACADEMIC SESSION

1Insurance MarketMeaning of insurance market, re-insurance company, insurers buyers e.g. individual/ private, corporate and public institutions. Insurance sellers, 2Insurance marketInsurance intermediaries e.g. brokers, agents, loss adjusters etc3Nigeria Insurance Association (NIA)Purpose of Nigeria Insurance Association, Roles of the Association4Nigeria Insurance Association(NIA) Membership of Nigeria Insurance Association, Membership requirements of NIA. 

 

 

5Nigerian Council of Registered Insurance Brokers (NCRIB)Meaning of NCRIB, purpose of NCRIB,6Nigerian Council of Registered Insurance Brokers (NCRIB)Roles of NCRIB, membership of NCRIB7Common insurance terminology IAccident, act of God, actuary, adjuster, arson, binding authority, broker etc8Common Insurance Terminology IICancellation, certificate of insurance(in detail)commission, covers, cover note, disaster, disclosure etc9Revision10 -12Examination. 11 - 13Examination

THIRD TERM SCHEME OF WORK CONTD.

IntroductionInsurance Market can be defined as the facilities that are available for placing of insurance and the different kinds of professional risk bearers available.Insurance Market consists of the buyers of insurance and the sellers together with the intermediaries (agents) who bring the two together. In addition there are also the regulators, representative bodies or organizations, consultants and technical advisers which are part and parcel of the market.

Nigerian Insurance Market

The Buyers

This is the person who has valid insurable interest in a subject matter of insurance i.e., anyone who is legally recognized with property or pecuniary interest, can insure their interest. The relationship may arise through ownership, part-ownership or responsibility for goods, or liability to pay damages or certain benefits.In Nigeria the buyers of insurance can be segmented as follows:(i) Individuals and families(ii) Business Organization(iii) Charities, Clubs and other Organizations.(iv)Governments (federal, state, local) and their agenciesOther insurance buyers are;(i) Manufacturing industrial concerns(ii) Small and medium scale industries(iii) Banking industry(iv)Health institutions(v) Tourist and hospitality industries, hotels(vi)Transport industry(vii) Educational institutions (viii) Oil and energy industry.

Buyers Of insurance Products

Individuals.The demand for insurance by individuals depends on their financial position. As a person’s income rises, he can afford to buy the financial security provided by insurance. A rise in a person’s income enables the person to acquire more property such as; a car, a house and household goods, which will in turn create the need for insurance protection.

Business Organizations.The demand for insurance by business buyers is a function of economic development. As an economy grows, more capital - intensive methods of production tend to be employed. This will in turn increase the demand for property insurance for the protection of property and liability insurance to compensate employees, consumers and third parties for injury or damage to property resulting from the activities of business organizations.

Buyers Of insurance Products (Contd.)

Charities, Clubs and other Organizations.This third group of insurance buyers tends to demand for insurance when their activities and income increases. An increase in activities increases the needs for group personal accident for the protection of their members and property insurance for the protection of their assets.Governments and Government Agencies/Corporations The need for insurance by these buyers is mainly to protect governments’ assets movable or immovable. In the case of agencies /corporations, the need for insurance protection is obvious due to the fact that some of their activities are hazardous. For instance, NNPC needs to insure its assets and there is need to insure aircraft. In fact, no aircraft can be allowed to fly in the air space of another country without insurance protection.

Buyers Of insurance Products (Contd.)

The SellersThe sellers or suppliers of insurance are the insurance companies and the reinsurance companies. At present there are about 118 registered insurance companies and 5 registered reinsurance companies. Most of the insurance companies are incorporated pursuant to Companies and Allied Matters Act 1990. About 106 of them are private limited liability companies while the rest are public companies. About sixty companies underwrite life assurance business with five operating as specialist life offices. The reinsurers provide technical security and capacity for the insurance companies and do not supply insurance directly to the consumers.

Sellers Of insurance Products

The intermediaries are mainly insurance agents and insurance brokers(a) Insurance AgentAn insurance agent is a person employed to act for another called the principal who is to bring the principal into contractual relationship with the third party.

Features of insurance agent(i) Agents are always on part time basis(ii) They are not expert in insurance(iii) They are remunerated by way of commission(iv) Sometimes he has limited power to issue cover note(v) Agent cannot be sued for professional negligence

The insurance market Intermediaries

An intermediary, who acts on behalf of a person who is applying for insurance. They earn a commission from the insurer, however, they have a responsibility to obtain the best cover for the best price possible.Features of insurance brokers(i) He places business with insurers.(ii) He is a full time insurance specialist of professional standing.(iii) He studies the insurance needs of his client.(iv) At times he carries out the physical inspection or survey of the clients business premises(v) He makes recommendation when necessary with a view to improving the physical hazard of the risk.(vi) He negotiates claim settlement with the insurers and loss adjusters(vii) He is rewarded by way of commission by the insurers.(viii) A broker can be sued for professional negligence(ix) A broker is an agent of the insured and not an agent of insurance company.

  

Insurance Brokers

The Nigeria Insurers Association (NIA) is the central professional body of all registered insurance companies in Nigeria. NIA was established in 1971.Purposes/Objectives NIAThe objects of the Association are embodied in detail in the Memorandum of Association. Some of them are highlighted as follows:

(i) To protect, promote and advance the common interest of insurers in Nigeria.

(ii) To advise members on any action or proposed action by Government or any other Authority in connection with any legislation or policy.

(iii) To advise or consult with the Government regarding any act or thing done or being contemplated by it or its Agencies or other statutory bodies with regard to any matter relating to

insurance business.

NIGERIA INSURANCE ASSOCIATION(NIA)

(iv) To guide and assist members in complying with any statute, regulation, order and Government directive relating generally to the business of Insurance.

(v) To create better understanding of Insurance by all sections of the community including the furtherance of knowledge and research on Insurance and related matters.

(vi) To collect, collate and disseminate statistical, economic and other information relating to Insurance.

(vii) To maintain constant dialogue with other trade Associations in the Insurance industry with a view to fostering good relationships between them, the NIA as well as the insuring public.

(viii) To confer, consult, maintain, contact and co-operate with any individuals, associations, societies, institutions or bodies within or outside Nigeria having objects similar to those of the Association.

(ix) To promote personal and friendly relationship among members of the Association; holding conferences and meetings for the

discussion of technical and professional matters, relevant to Insurance.

Purposes/Aims of NIA contd.

1. A & G INSURANCE PLC BAICO PLAZA, 12, ABIBU OKI STR., OFF MARINA, V/I P. O. BOX 72942,

LAGOS 2. ADIC INSURANCE COMPANY LIMITED

5TH & 6TH FLOOR, NACA HOUSE, 43, AFRIBANK STR., VICTORIA ISLAND, LAGOS. 3. AFRICAN ALLIANCE INSURANCE COMPANY LIMITED

112, BROAD STREET MARINA P. O. BOX 2276, LAGOS.4. AIICO INSURANCE PLC

HEAD OFFICE PLOT PC 12, AFRIBANK STR., V/I, P. O. BOX 2577, LAGOS.  5. ANCHOR INSURANCE COMPANY LIMITED

7/13 AKA ROAD, P.M.B. 1151, UYO, AKWA IBOM STATE.6. CAPITAL EXPRESS ASSURANCE LIMITED

CAPITAL EXPRESS HOUSE, 13 BISHOP KALE CLOSE BEHIND SAKA TINUBU STREET, OFF KASUMU EKEMODE STR., V/I, LAGOS.7. CONSOLIDATED HALLMARK INSURANCE PLC

PLOT 33D BISHOP ABOYADE COLE STREET, P. O. BOX 74013, VICTORIA ISLAND, LAGOS.8. CONTINENTAL REINSURANCE PLC

ST. NICHOLAS HOUSE, CATHOLIC MISSION STREET, LAGOS.  

Members of NIA

  9. CORNERSTONE INSURANCE PLC 136, LEWIS STREET, LAGOS. P. O. Box 75370, VICTORIA ISLAND, LAGOS.

10. CRUSADER GENERAL INSURANCE LTD. 23/25 MARTINS STREET, LAGOS.

11. CRYSTAL LIFE ASSURANCE PLC ELEGANZA HOUSE,12 FLOOR 15B, JOSEPH STREET,  P. O. BOX 1514, 

LAGOS.12. CUSTODIAN AND ALLIED INSURANCE LIMITED

STILLWATER HOUSE, 14B KEFI STREET, S.W. IKOYI, LAGOS. 13. EQUITY ASSURANCE COMPANY PLC

1196 BISHOP OLUWOLE STREET, VICTORIA ISLAND, P. O. Box 1514, LAGOS.14. FIN INSURANCE COMPANY LIMITED

34, GANA STREET, MAITAMA ABUJA F.C.T., NIGERIA.15. GOLDLINK INSURANCE PLC

6 EMMANUEL STR., MARYLAND, IKEJA P. O. BOX 5987 MARINA, LAGOS.16. GREAT NIGERIA INSURANCE PLC

8, OMO OSAGIE STREET, SW IKOYI, LAGOS.17. GUINEA INSURANCE PLC

REINSURANCE BUILDING, 10TH FLOOR 46, MARINA, P. O. BOX 1136, LAGOS.18. INDUSTRIAL & GENERAL INSURANCE CO. LTD.

PLOT 741, ADEOLA HOPEWELL STR., V/I, P. O. BOX 52592, FALOMO, LAGOS.

Members of NIA contd.

The Nigerian Corporation of Insurance Brokers was established in 1962 to provide a central organization for the regulation of all practicing Insurance Brokers in Nigeria.

 This body got its first legal recognition in 1991 when the Insurance Decree N0 58 of 1991 made compulsory for all practicing Insurance Brokers to be members of this body before being registered by the Commissioner for Insurance.

NIGERIAN COUNCIL OF REGISTERED INSURANCE BROKERS (NCRIB)

i. To establish and maintain a central organization for insurance brokers.

ii. To maintain a well equipped library.iii. To collaborate as appropriate with government and with

various institutions and professional bodies in achieving the objectives of the Council.

iv. To organize as it deems fit along or in association with other institutions or professional bodies, Conferences, Seminars

and workshops on general and specific areas of insurance.v. To ascertain the law and practice relating to insurance.vi. To formulate and maintain a standard of conduct for

members and to encourage the appropriate professional attitudes by members.

vii. To invest the fund of the corporation for the well being of their members

viii. To maintain a high standard of conduct among its members.  

OBJECTIVES OF NCRIB

  A.O. RICHARD INS. BRKS. 9, OHIAMINI RD, OFF RUMUOLA RD, BOX 8717, PORT HARCOURT. ACCORD NIGERIAN INSURANCE BROKERS AND CONSULTANTS

41/43 BOMBAY CRESCENT, APAPA LAGOS Accredited Insurance Brokers

14, Abubakar Kigo Road, P. O. Box 4202 Kaduna ACCURATE INSURANCE BROKERS

45, ADEBOYEJO ST. OFF IJESHA EXP. ROAD B/STOP, IJESHA TEDO, SURURLERE

ACELINE INSURANCE BROKERS

SUITE B28, EKO COURT KOFO ABAYOMI Victoria island, lagos ACI INSURANCE BROKERS

PLOT 68, ARCADE CLUB SUITS, 1ST AVENUE, BY SHEHU SHAGARI WAY ABUJA.

MEMBERS OF NCRIB

ACORN INSURANCE BROKERS

223, IKORODU ROAD LAGOS

ADOGOLD INSURANCE BROKERS

96 Secretariat Road, Rafag Plaza, Beside After Seven Hotel, Ado - Ekiti

ADS INSURANCE BROKERS.

PLOT 652, 20, ABA CLOSE, AREA 8, GARKI

ABUJA

AFN BROKERS LTD.7, AJAO RD. OFF ADENIYI JONES AVENUE, OPP. WAHUM, IKEJA,

LAGOS. AFRIBANK INSURANCE BROKERS1. OLADELE OLASHORE STREET VICTORIA ISLAND.African General Insurance Brokers Ltd.77, Toyin Street, off Keffi, S/W Ikoyi, Lagos.African Insurance Brokers Ltd.25, BOYLE STREET, ONIKAN KAGOS

MEMBERS OF NCRIB CONTD.

ALBERT THOMAS INSURANCE BROKERS LIMITED

3, SAMUEL MANUWA STREET, VICTORIA ISLAND, LAGOS ALFAM INSURANCE BROKERS

29, BERKLEY STREET, LAGOS. ALL STAR INSURANCE BROKERS

SUITE 204, PLOT 855 DANYADODO HOUSE, GARKI ABUJA . ALPHA BROKERS.

75 (59) CHIME AVENUE, NEW HAVEN, P. O. BOX 1179, ENUGU ALPHA CHOICE INSURANCE BROKERS

299, IKORODU ROAD, LAGOS

MEMBERS OF NCRIB CONTD.

Copy and complete the following statements 

1. ____ and ___ are two types of Agent2. NICON stands for_______3. NICON was established in ____4. The commission given to a broker is referred to as ______5. The consideration for insurance contract is _____6. NIA stands for ______7. NIA was formed in _____8. The money paid to insured by the insurer out of mercy or favour is called9. The uncertainty of loss is known as _____10. A document setting out a contract of insurance is referred to as _____11. A person who places insurance business is called ______12. A demand by the insured for payment under his policy is called ____13. A document issued by an insurance company giving temporary cover pending the issuance of a certificate is called ____14. ____ type of hazard has to do with human conduct or behavior aspect of risk.15. Utmost Good Faith is also referred to as ________16. A policy holder is also called _____17. An application to an insurer for the provision of insurance is called _____18. A person who is not a party to a particular contract but becomes involved with it is called ______19. The maximum liability of insurer as specified in a policy is known as _____20. In insurance, days of grace is always between ____ to ___ days.

CLASS WORK

Copy and complete the following statements

1. Part time and full time agent are two types of Agent2. NICON stands for National Insurance Corporation of Nigeria3. NICON was established in 19694. The commission given to a broker is referred to as brokerage5. The consideration for insurance contract is premium6. NIA stands for Nigeria Insurance Association7. NIA was formed in 19718. The money paid to insured by the insurer out of mercy or favour is called ex-gratia payment9. The uncertainty of loss is known as risk10. A document setting out a contract of insurance is referred to as policy document11. A person who places insurance business is called insurance broker12. A demand by the insured for payment under his policy is called claim13. A document issued by an insurance company giving temporary cover pending the

issuance of a certificate is called cover note14. Moral type of hazard has to do with human conduct or behavior aspect of risk.15. Utmost Good Faith is also referred to as uberrima fidei16. A policy holder is also called an insured17. An application to an insurer for the provision of insurance is called proposal18. A person who is not a party to a particular contract but becomes involved with it is

called third party19. The maximum liability of insurer as specified in a policy is known as sun insured20. In insurance, days of grace is always between 15 to 30 days.

CLASS WORK-Correction

The Institute was established in 1981 as a professional association of all registered loss Adjusters in Nigeria. 

Aims/Objectives of ILANi. To engage in activities that will ensure the

general welfare and public well being of Insurance adjusters in Nigeria.

ii. To encourage its members to attend and participate in conferences, symposia and other training programmes

iii. To provide unified code of conduct for its members

INSTITUTE OF LOSS ADJUSTERS OF NIGERIA (ILAN)

The Commission was established by National Insurance Commission Act No.1, 1997 to ensure the effective administration, supervision, regulation and control of insurance business in Nigeria.  The Commission thus derives its powers from both the National Insurance Commission Act, and the Insurance Act 2003.  The Commission registers and grants licenses to insurance companies, insurance agents, insurance brokers, and loss adjusters.  The inspectorate department of the Commission carries out routine and special investigations of operators to ensure that they operate according to the provisions of Insurance Act 2003 the relevant Regulation and Policy Guidelines.  In serious cases of breach of the provisions of the law and insolvency, the Commission has powers to suspend an operator from carrying on business, withdraw license, take over the management, or liquidate the company or firm.

NATIONAL INSURANCE COMMISSION (NAICOM)

i. Establish standards for the conduct of insurance business in Nigeria.ii. Approve rates of insurance premiums to be paid in respect of all classes

of insurance business;iii. Approve rates of commissions to be paid in respect of all classes of

insurance business;iv Ensure adequate protection of strategic Government assets and other

properties;v. Regulate transactions between insurers and reinsurers in Nigeria and

outside Nigeria;Vi Act as adviser to the Federal Government on all insurance related

matters;vii. Approve standards, conditions and warranties applicable to all classes

of insurance business;viii. Liaise with and advise Federal ministries on all matters relating to

insurance.ix. Protect insurance policy-holders and beneficiaries and third parties to

insurance contracts; x. Contribute to the educational programmes of the Chartered Insurance

Institute of Nigeria and the West African Insurance Institute.

Functions/Aims of NAICOM

1. Accident .An unplanned and unexpected event which occurs suddenlyand at a particular place.

2. Act of God: An event or occurrence due to natural causes which occurs independently of human intervention and either could not be foreseen, or if foreseen, could not be reasonably guarded against. (e.g. storm, flood, earthquake, cyclone)

3. Actuary: Actuaries analyse and manage the risks of financial contracts.The actuary's work is based on the application of mathematical, statistical, economic and financial analysis to a wide range of practical problems in long-term financial planning and management. Actuaries act as financial advisers to a variety of commercial organisations such as life, general (non-life) and health insurance companies, superannuation funds, banks and stockbrokers as well as governments.

4. Adjuster: An Adjuster is a representative of the insurer who seeks to determine the extent of the company's liability for loss when a claim is submitted.

5. Agreed Value: A car's agreed value is set at the beginning of each period of cover. It is based on the fair value given then for the cars make and model in the motor trade's most commonly accepted price handbook. The value doesn't change for the period of cover.

6. Amount covered: The current amount covered is shown on the most recent ofinsurance schedules and the renewal notice. It is the you’re your insurer will pay, less any excess, for a claim that is covered by the policy.

7. Arson Any unlawful setting of fire to property.8. Ab initio: From beginning9. Agent: A person who acts on behalf of another (the principal). He introduces business for which he

receives commission. He acts for insurer or insured or for both10.Arbitration: The use of an independent person to settle a dispute between an insurer and the

insured.

SOME INSURANCE TERMINOLOGIES

Copy and complete these statements

1. Insurance is associated with ______

2. _____ is a temporary policy of insurance

3. Extra days given to the insured to renew his insurance policy is referred to as ______

4. The act of throwing or casting goods overboard in order to lighten a ship and save it from danger is called ____

5. In insurance, to indemnify means , to _______

6. Payments made by the insurance company out of sympathy to the insured outside its legal obligations is known as _____

7. Brokerage is the commission given to _______

8. A fact that would influence a prudent underwriter on whether to accept a risk, under the terms and at what premium

is called ________

9. The right possess by the underwriter/insurer to recover a loss from a third party by taking on the right of the insured is referred

to as _______

10. The person that holds an insurance policy is called _______

11. An agreement made between two or more persons which is intended to have legal consequences is referred to as________

12. NICON stands for _________________________________

13. The possibility of occurrence of unpredictable or unplanned events which may result in loss is regarded as _______

14. Those risks which involve the possibility of either gain or loss is called ______

15. Any circumstance that promotes the probability of a loss is known as _____

16. Evidence to show that the holder has insured his property is called _______

17. ______ and ______are two types of hazard.

18. Any risk that can be insured is known as _________ risk

19. The amount the insured pays to the insurance company for insuring his property is called _________

20. _______ acts as intermediary and arranges insurance between the insurer and insured on a part time basis.

CLASS WORK

CLASS: YEAR 11SUBJECT: INSURANCE.

1. Write short note on the following. Give the meaning, year of establishment and

functions of each of them.(a) National Insurance Corporation of Nigeria(NICON)(b) Chartered Insurance Institutes of Nigeria (CIIN)

THIRD TERM MID TERM ASSIGNMENT

11. Assignment: The transfer of a right under a contract.12. Assurance: This is the term generally used in reference to life assurance. This is an event that is based on possibility.

B13. Barratry: Destruction of ship or throwing goods over board by the

master or crew without good intention.14. Binding Authority: When a Broker has authority to arrange the

insurance on behalfof the Insurance. In arranging this insurance the Broker will be

acting as agents of the insurer, not as your agent.15. Broker: An intermediary, who acts on behalf of a person who is

applying for insurance. They earn a commission from the insurer, however, they have a responsibility to obtain the best cover for the best price possible. In certain circumstances a broker can also act as an agent for the insurer in terms of issuing a policy or collecting a premium.

16. Bailee: Someone in legal possession of another person’s property e.g watch repairer.

17. Brokerage: commission received by a broker.C

18. Capacity: the maximum amount of risk that can be accepted.19. Cargo insurance: Insurance of goods carried by sea.20. Caveat Emptor: Let the buyer beware.

Insurance terminologies contd.

21. Claim: A demand by the insured for payment under his policy.22. Commission: The payment to an agent for the introduction or renewal of business. A fee charged by a broker or agent for services in the sale of an23. Composite Insurer: An insurer transacting both life and general insurance.24. Conditions: Provision in insurance policy specifying some important facts.25. Contributions: The division of loss between insurers where two or more covers are provided for the same subject matter and the same risk are involved.26. Cover Note: A document issued by an insurance company giving temporary cover pending the issuance of a certificate.27. Credit Insurance: Insurance of loan repayments in the event of unemployment, sickness or death.28. Cancellation: The termination of a policy before the expiry date.29. Carrier: Sometimes used to describe the insurer. Not generally used because of confusion with carriers of freight.30. Certificate of Insurance: A certificate that acts as proof that a

policy has been issued. Usually requested by a financial institution. A certificate that acts as proof that a person has earned an insurance rating or no claim bonus entitlement.

Insurance terminologies contd.

31. Comprehensive Insurance: Provides specified cover for damage to the insured car as well as damage the insured car may cause to the property of others.32. Consequential Loss: A subsequent loss that results from the direct damage e.g.

public transport costs incurred when a car is off the road due to an accident.33. Cooling off period Federal law provides that you can cancel your policy within

14 days of its purchase date.34. Cover(s) :Means the protection provided by the policy.35. Coverage: The scope of the protection provided under a contract of insurance.

D36. Depreciation: A decrease in the value of any type of property over a period of

time resulting from use, wear and tear, or obsolescence.37. Defamation: The act of publishing an utterance to a third party, including verbally, which causes injury to the honour or reputation of another.

A defamatory statement can take two basic forms, Libel, which is a defamatory statement in permanent form such as in writing or by other media. Slander, defamation in transient form such as an oral communication.38. Direct insurer :Is an insurer which deals direct with the consumer rather than

through an intermediary or agent39. Deductible: The amount to be borne by the insured prior to the payment of the remainder of the claim.40. Deposit premium: First premium paid by the insured prior to the calculation of the full premium

Insurance terminologies contd.

41.. Disclosure: The duty of a proposer to reveal all material facts that might affect the insurance.

42. Disaster: A disaster is said to have occurred when the normal community

and organisational arrangements cannot cope with a hazard impact.

43. Due date: The date a policy is in force to and by when a renewal premium

must be paid.

E

44. Earned Premium: The amount of the premium that has been "used" during the

term of a policy. For example, if a twelve month policy has been active for six months, half of the total premium has been earned.

45. Effective date: The date on which the cover of an insurance policy commences 

46. Employment Practices Liability :Covers a range of liabilities that can face an employer, following wrongful termination, refusal to employ, failure to promote, demotion,

disciplinary, action, sexual harassment, discrimination or defamation of an employee.

47. Endorsement :Means a special condition that applies to a policy. For example,

an endorsement may state that drivers under a nominated age are not covered under the policy.

48. Excess :An excess on a policy is the first amount that must be contributed by the insured towards each claim.

49. Expiry date: The date coverage ceases.

50. Extra Cost of Reinstatement :Provides protection for additional cost to comply with

Government Regulations following a loss such as; current regulations may require you to include a wheelchair access ramp, these types of costs need to be included in your sum insured.

Insurance terminologies contd.

51. Endowment Assurance: Life assurance where the sum assured is paid after a specified period or on earlier death.52. Engineering Insurance: The insurance of plant and machinery53. Ex-Gratia Payment: A payment made by an insurer by way of goodwill or favour where a claim has been rejected.54. Excess of Loss: A reinsurance contract that provides cover for all claims amount in excess of an agreed level per claim.55. Exclusion: A restriction in the scope of a policy.F56. Fidelity: Losses sustained through fraudulent or dishonest acts committed beemployees.57. Financial Services Guide: Introduces the service provider and sets out to provide:- who we are;- how we can be contacted;- what financial services we provided and how we provide them;- who we are representing if we are acting under a binding authority;- what the remuneration (commission) arrangements are;- what our relationship is to any product issuers; and- what our dispute resolutions scheme is and how to access it.58. Fire: Means burning with flames.59. Flood: Means the inundation or covering of normally dry land by water which: escapes or overflows from, or cannot enter, because it is full or has overflowed, or is prevented from entering, because other water has already escaped or been released from it, the normal confines of any watercourse or lake, including any that may have been modified by human intervention, or reservoir, canal, dam or storm water channel. Flood does not mean storm water run off from areas surrounding the site or water escaping from any water main, pipe, street gutter, guttering or surface.60. Fraud: The term "fraud or dishonesty" encompasses all those risks of loss that might arise through dishonest acts or omissions.