CHAPTER ONE
INTRODUCTION
1.1 Background to the Study
The history of insurance industry in Nigeria could be traced to the British colonial trading companies that established agency offices in Nigeria, on behalf of insurance companies in the UK. After the Nigerian political independence of 1960, indigenously owned insurance companies sprang up with many inadequacies which in turn brought confidence crisis and strong apathy to not just life insurance purchase but an industry-wide boy cut (Augustine and Bamidele, 2013).
The federal government of Nigeria in an attempt to urge Nigerians to patronize the life insurance cover has put a number of policies, programmes and incentives in place without achieving any significant changes in the economy (CBN, 2006). Among the programmes put in place are compulsory national health insurance scheme, life insurance policy for all workers and health care services to the grass root level. But in spite of all the efforts made by the government, the management and development of life insurance policy in Nigeria have been unimpressive, leaving the nation with low industrial production and the entire populace with a low quality of life (Mojekwu and Ibekwe, 2015).
This antecedent has forced stakeholders to now look at how to build an appropriate framework that would educate consumers on the need for insurance policy.Consumer education is often considered an integral part of insurance schemes; a win-win solution that benefits both insurance practitioners and their clients. It is supposed to help potential clients make sound choices and practitioners stimulate demand. Insurance education gives consumers an overview of insurance and provides a comprehensive insurance knowledge (Dror, Dalal and Matul, 2010). It can be acquired through formal and informal way.
The literacy level of a country can provide a picture of the percentage of the population with formal education and informal education which of course can give an insight of how people in such country are knowledgeable about insurance (Churchill, 2006). It should however be noted that not all those with formal education has an in-depth of what insurance really means, some of these people with formal education still thinks the best thing is self insurance which means that they prefer to maintain a fund to cover possible losses rather than by purchasing an insurance policy (Ackah and Owusu, 2012). Research has shown that this set of people practice self insurance the most. A previous study by Garba and Jibril (2011) suggested that lack of knowledge about insurance product and to an extent misunderstanding of the concept of insurance account for low uptake of life insurance policy among low income population in Nigeria.
Insurance education can be defined as a process whereby the knowledge of the consumers in relation to the insurance products and concepts, and the financial risks and protection is increased, so that the consumers can make the correct choices (Leppert et al., 2012). Insurance education is computed to give a quantifiable measure of a person’s knowledge and attitude towards insurance (Ackah and Owusu, 2012).
Most people in the informal sector do not take up insurance as a way of preparing towards future unforeseen misfortunes, this could be because the perception among some individuals who felt that preparing ahead of possible misfortunes is like inviting evil. Other reasons given for low insurance up-take were the general lack of insurance knowledge amongst the populace, low income level and reliance on God’s protection to prevent calamities (Ackah and Owusu, 2012).