AN ASSESSMENT OF THE CHALLENGES AND OPPORTUNITIES IN ESTABLISHING AN INSURANCE AGENCY WITHIN THE INSTITUTE OF MANAGEMENT AND TECHNOLOGY (I.M.T.)

CHAPTER ONE INTRODUCTION A significant number of people in Nigeria today have yet to fully grasp the essential role that marketing plays within the insurance industry. Frequently, there is a widespread misunderstanding concerning the specific functions and responsibilities of brokers and agents in this sector. Before delving into the core issues explored in this project, it is important to first establish a foundational understanding of the relevant concepts. Marketing can be broadly defined as a business function that facilitates the process of selling, incorporating activities such as market research, product promotion, distribution, service delivery, and product scheduling, among others. Given that marketing is essentially about identifying and addressing customer needs, it is noteworthy that, in many instances, clients may not be aware of their actual needs. Consequently, it falls upon agents and brokers to enlighten and persuade prospective clients regarding the relevance and benefits of insurance products. The primary rationale for establishing an insurance agency in any location is to foster insurance awareness among the residents of that specific community (Martina & Kumar, 2018). This initiative helps close the gap between the general public and insurance policyholders, ultimately offering protection and compensation against various risks. The introduction of an insurance agency within an educational institution provides a unique opportunity for both students and the surrounding community to gain insight into risk management, many aspects of which they may previously have been unaware of. Specifically, the proposal to establish an insurance agency within the Institute of Management and Technology (IMT) is especially pertinent, given the institute’s central role in developing skilled manpower for Nigeria’s insurance industry. Despite the institution’s academic prestige, a major challenge remains the low level of awareness among the community about the significance and advantages of insurance. An insurance agency functions as a business entity primarily involved in marketing and selling insurance policies to the public. In this capacity, such an agency must possess the competence to advise potential clients on the most appropriate policies to suit their specific needs, including the benefits associated with them (Nwaki & Eze, 2020). Typically, agencies are compensated through commissions provided by insurance companies. The scale and scope of an agency’s operations are largely determined by factors such as financial resources, consumer preferences, and compliance with governmental regulations pertaining to agency establishment, particularly as outlined in Section 28 of Insurance Decree 58 of 1991. It is widely recognized that the Nigerian insurance industry is still in its developmental stages when compared to its counterparts in more developed nations (Debela, 2018). However, research and surveys have shown that insurance policy patronage is highest within academic communities across Nigeria, indicating a promising avenue for growth. 1.1 BACKGROUND OF THE STUDY The creation of an insurance agency within an academic institution like IMT has the potential to offer substantial benefits to both the institute’s staff and students—particularly those in the Department of Insurance (Tworek & Tomecki, 2012). This initiative could serve as a platform for instilling practical insurance sales skills in students, while also helping to reduce the overall cost of insurance coverage for the institution. Furthermore, the insurance industry itself stands to gain from such a development, as it offers a credible means of enhancing the public image of insurance services in Nigeria (Dinku, 2000). The insights gathered from this research can serve as a valuable resource for the department, functioning as both a performance evaluation tool and a practical training ground for students in line with the broader goal of manpower development for the insurance sector. 1.2 STATEMENT OF THE PROBLEM Despite adherence to the regulations and policies set forth by the relevant insurance supervisory authorities, several challenges continue to hinder the successful establishment of an insurance agency within IMT. The most prominent of these issues include: Low Public Awareness: A considerable segment of the population remains unaware of the purpose and benefits of insurance. Additionally, it often takes considerable time and effort for brokers and agents to become recognized and trusted by the public. This lack of awareness significantly hampers effective marketing within the insurance industry. Absence of a Dedicated Insurance Unit: Currently, IMT lacks a dedicated insurance unit tasked with advising both staff and the institution on matters concerning insurance coverage and risk management. Negative Perception of Insurance Agents: Many insurance agents are unfortunately perceived as untrustworthy or exploitative. Consequently, there is a pressing need for a reputable insurance agency within the IMT community that can provide honest advice and facilitate reliable insurance transactions. Poor Industry Image and Trust Deficit: Due to the prevailing negative image of the insurance industry in Nigeria, many individuals are hesitant to engage in insurance-related activities. Therefore, the establishment of a trustworthy and transparent insurance agency with a visible and recognized presence on campus is essential to restore public confidence and encourage insurance patronage within the IMT community. 1.3 OBJECTIVE OF STUDY Developing implies growth this researcher study aim of establishing the factors that limit the growth of insurance agency in developing counters using Nigeria as an example. The study will also offer solution to the hinders identified. 1.4 RESEARCH QUESTION This aspect of the study looks at a way in finding out how the insurance agency has fared over the years. It would also be useful to look at some other things such as; 1.    The role of insurance agency and their function in IMT 2.    How effective has the establishment of insurance agency been to the insurance industry. 3.    How has the knowledge of the agency been received by the populace over the years. 4.    What is the Nigeria government doing to reduce lack of insurance consciousness or awareness on the part of an average African. 5.    What are the solution to the problems being encountered by insurance agency? 1.5 RESEARCH HYPOTHESES H0: There are no problems in the establishment of insurance agency in institute of management and technology (I.M.T) Ha:There are problems in the establishment of insurance agency in institute of management and technology (I.M.T) 1.6 SIGNIFICANCE OF STUDY This research will be of paramount important and of immense benefit to the staff of IMT and students of the department of insurance. It will also be a means of imbedding insurance sales potentially in the students of insurance as well as minimize the cost of insurance for the institute. The insurance industry will also benefits from this because it is a primary means of building good insurance image. 1.7 SCOPE AND LIMITATION OF STUDY Scope: The study is restricted to the institute, staff of IMT, insurance companies and agencies in Enugu state. LIMITATIONS; FINANCIAL CONSTRAINTS Usually finance is a major problems encountered in the curse of this research which made it difficult for me to get the necessary information’s.  Also the reluctance of those interviewed in releasing information due to confidentiality. POLITICAL CRISIS Due to the political instability in Nigeria, a lot of things are moving as before and this is causing a lot of problem to the Nation.  Due to this cost of living now is very high even fuel and kerosine is no where to be seen and if seen  the cost will be so high. PROBLEMS AFFECTING ESTABLISHMENT OF INSURANCE AGENCY IN IMT There are four major problems that influence the establishment of insurance agency in IMT. a). THE IMPACT OF LEGISLATION AND TAX CONCESSION-GOVERNMENT INTERVENTION AND TAX LAWS Legislation actually aids the insurance industry in form of tax concessions which encourages long term serigns. A major factor that influenced the development of insurance in IMT was the intervention of the government. The primary purpose of governmental control is the necessity to protect the interest of policy holder against possible exploitation by unscrupulous insurers. According to insurance decree, 1976, there were provisions on how insurance companies are to operate with regards to condition for registration made at operation, insurance policies accounts and audits amalgamation and transfer winding up, licensing and duties at insurers and agents, premium rates and commissions. Administration and settlement, miscellaneous and supplementary requirements and restriction can exert a considerable influence on the size and scope of the market. 1.    b) SIZE AND DISTRIBUTION OF THE POPULATION AND NATIONAL INCOME. The size density and distribution of population also demographic and socio economic factors all have direct influence on the market for insurance particularly life assurance. When real income, National income increases rapidly, there will be a large potential market for life assurance. 1.    c) COMPETITION Aggressive competition and increasing costs of service and administration have led to the elimination of small unprofitable companies and to the difficulty in offering personal service. Thus insurance company amalgamated to exploit the economies of scale and to invest heavily in computers and other ancillary equipment in order to; 1.    Calculate cost accurately 2.    Achieve lower operational costs iii. Expand their service capability d). INFLATION Insurance market faces certain inflation levels and high taxation which both reduce purchasing power. Severe bouts of inflation recently have increased the reluctance of the public to enter into long term financial commitments. Now insurance companies allow guaranteeing surrender values of the policy holders or allow hem borrow against surrender values to let him that his money is not completely tied up, therefore growing awareness of the need to budget as well as invest wisely. Sales of assurances – whole life and endowment policy designed to provide for savings declined. Instead policies with investment element attached e.g endowment with profit associated unit trusts emerged. 1.8 PROSPECTS OF INSURANCE AGENCY IN IMT Many writers have dwelt on recommendations on how to improve the quality of insurance agency in IMT. 1.    Prompt claims settlements To dispose  the myopic belief of the public that the insurance business is a certificated robbery or that insurers are anxious when collecting premiums but avoids settlement of claims at an insurance of the insuring public, insurance industry  should make a point of duty to settle claims brought before it as and when due. 2.            The insurance industry should intensify in its marketing activities, however marketing activity should be carried out with all amount of truth and honesty. The advertisement should carry out only all the qualities possessed by the policy and not those which are not fulfilled by the policy. 3.            Market segmentation and market research should be continuous cycle in the marketing research of insurance in IMT. To differentiate people, different strategy and marketing techniques used should be suitable to the segment concerned. 4.            Renewal department should be advocated. This will always play the role of informing policy holders of their agreement with the industry as regard the contract, reminding then when premium payment are due. 5.            Insurance industry should create insurance awareness by spreading their investment activities to the rural areas to assist in developing ventures. Government should create a special body to serve as insurer market examines and supervisions to nullify or conform the strong allegation that premium income declared annually by insurers are inflated figure in collaboration with insurance companies auditors to win public confidence. GLOSSARY 1.9 DEFINITION OF TERMS Certain terms has to be defined at the end of this study to enable the readers understand the words while reading the work. Agents:     They are insurance intermediaries who are duly licensed are duly licensed and in a position to introduce business to the insurer. Assurance: It means the same as insurance but is used in a move sured event like in life contracts. Broker:      A person who buys and sells for others. They are regarded as professional expert. Also they are concerned with the placing of  insurance business. Campus:    Grounds of schools, college or university. Clients:      Customers who engage the services of the advertising agency Commission:      The remuneration paid to an agent for the introduction of business, usually in the form of a percentage of the premium Institution: An establishment organization for a special educational purpose. Lecturer:   Persons who give lecturers. They are junior to the professor. Policy:       Is a written statement of the terms of a contract of insurance. Sample:     Any part of the population or figuratively if the population is a set then the         sample in a subset Sum insured:     This is the amount covered by the life policy which becomes payable as a claim in the event of death or of the life policy. Premium:  This is the price paid for the purchase of life assurance cover.