Lesson Notes By Weeks and Term - Senior Secondary 2

Term – 3^rd Term

Week: 3

Class: Senior Secondary School 2

Age: 16 years

Duration: 40 minutes of 2 periods each

Date:       

Subject:      Insurance

Topic:-       Insurance market II

SPECIFIC OBJECTIVES: At the end of the lesson, pupils should be able to

1. Discuss the forms of insurance companies policies are made available through
2. Explain the insurance intermediaries and their examples

INSTRUCTIONAL TECHNIQUES: Identification, explanation, questions and answers, demonstration, videos from source

INSTRUCTIONAL MATERIALS: Videos, loud speaker, textbook, pictures

INSTRUCTIONAL PROCEDURES

PERIOD 1-2

NOTE

INSURANCE MARKET

Insurance policies are made available through the following:

Insurance companies are classified according to the functions or services they render to the insuring public. They are:

1.Insurance companies

1. a) Proprietary companies: These insurance companies are owned by shareholders, incorporated as liability. The profit after tax accrues to the shareholder. They attend general meeting for presentation of audited accounts and declaration of dividend. A proprietary insurance can sell to the public directly by passing through the intermediaries (agents, brokers).
2. b) Mutual companies: Here, groups of individual mutually agree to come together for the promotion of their business interests along with their member welfare benefits. The bulk of transactions comes from their members. The policy holders enjoy lower premium and share among themselves the realised profit. The policy holder could be called to make further contribution to the fund if the annual premium was inadequate to meet claims and expenses. This class of insurance business is not popular in this part of the world.
3. c) Specialist companies: This form of insurance company specializes in one class of insurance business. An example of such is African Alliance Insurance Company which specializes in life assurance.
4. d) Composite insurance companies: these are companies engaging in more than one insurance business (life and non life). The include; * Nigeria Insurance Plc. * Royal Exchange Assurance. * NICON Insurance Corporation etc. It requires elaborate than that of specialist company, i.e., each class of insurance will likely have its underwriting staff which will only deal with such risk. Such companies usually have life manager, marine manager, property manager etc. The capital requires more higher capital than specialist insurance company.
5. e) Tariff companies: This refers to the insurance company that is a member of an association which regulate the business activities of the members, such as premium charging, policy wordings, codes of ethic, technical activities etc. Examples of these companies are those which are members of Nigeria Insurers Association (NIA), West Africa Insurance Association, Africa Insurance Association, etc.
6. f) independent company (non-tariff companies): These are companies who do not belong to any insurance association. They decide on their own policy wordings and premium to be charged. Although they still follow the same rules that are applied by tariff companies as regard the level of premium charged and policy wordings

2.Reinsurance companies

The reinsurance companies accept risk only from the insurance companies. They provide protection by reinsuring what has been insured by the insurance companies. They accept risks from insurance companies in other countries. The Nigerian reinsurance market comprises of few reinsurance companies. They are:

(i) Continental Reinsurance corporation, Lagos.

(ii) Globe Reinsurance

(iii) Africa Reinsurance corporation, Lagos

3. Industrial assurance company:

This is usually a proprietary company with involvement in insurance business limited to the policies sold to the policy holders at their homes and offices. These companies arrange for the collection of premium frequently ( on weekly or monthly basis) unlike the usual form of collection that can be annually, half yearly or monthly.

THE INTERMEDIARIES

Insurance intermediaries are the middlemen who usually constitute the link between buyers and sellers of insurance services. They include:

1) Insurance Agent:

These are individuals employed/appointed by insurance companies, especially life assurance to assist the insurance companies sell their products to the insuring public. They are not necessarily insurance expert, they perform and act on behalf of their principal within a specified guideline. Examples are accountants, estate agents, solicitors, builders and garage owners. An agent is expected to have a certificate of proficiency in insurance, issued by the chartered insurance institute of Nigeria before he is licensed by the National insurance commission as an agent. Agents must have the details of their client and the insurance companies they use.

2)Insurance Brokers:

These are professional intermediaries that connect the insurance companies with the insuring public. The expert position of a broker gives him the advantages to give advice to the insuring public as to the type of cover available and the suitable one to be purchased. They are considered acting in the interest of the insuring public who are their client. The technical advice will centre on the type of cover required, claim procedure, interpretation of policy conditions, etc. They receive commission from the insurance companies.

3. Loss Adjuster

A loss adjuster is a professional intermediary whose principal function is to investigate insurance claims with the view of making impartial recommendation to the insurance company as regard the extent of their liability under the terms of the policies. Where the insurer has the liability, it is the responsibility of the loss adjuster to adjust the claims appropriately without bias. The loss adjuster submits the report of the investigation to the insurer. For him to be able to perform his functions adequately he should investigate thoroughly. He must be transparent and honest. His integrity should not be in doubt to the insurance company because the insurance company is expected to rely on his advice

EVALUATION:    1. Discuss the insurance companies policies are made available through

2. Discuss the insurance intermediaries, citing valid examples

CLASSWORK: As in evaluation

CONCLUSION: The teacher commends the students positively