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Much economic waste have resulted from Motor accident in the Nigeria Insurance. For risks have not been wisely handled and this has resulted in waste and untold hardships. This project work titled “Practice of Motor Insurance in Nigeria problems and prospects” is aimed at analyzing the waste situation, death and injured third parties from motor accident, theft and give in Nigeria, their alter math’s, and the significance of motor insurance as a measure to minimize the possible losses from motor incidences.

The project works further showcase the problems and prospects of motor insurance practice in Nigeria.

In conducting the research the researcher used the instrument of questionnaire and interview for data collection, and made use of second hand (material) information; Empirical conclusion was drawn from findings following analysis of data which was done by simple percentages.

The researcher used the semi-text and tabular method of presentation for simplicity and clarity.

Findings from the research provided answers to the research questions supporting the view that motor insurance is a good measure and commendable way to handling our motor vehicle risks in order to minimize economic wastes resulting from motor vehicles accident losses or damages, theft and fine.

Chapter one of this work introduces the whole work, chapter two presents a review of related literature to the project topic.

Chapter three is on the research design and methodology. The analysis is done in chapter four including data presentation. Chapter five deals with the summary of findings, recommendations and conclusion.

CHAPTER ONE                                                                                      

1.0     Introduction                                                                            1

  • Background of the Study 1
  • Statement of the Problems 3
  • Purpose of the Study 4
  • Significance of the Study 4
  • Scope and Limitation of the Study 5
  • Definition of Term 5

CHAPTER TWO                                                                                               

  • Review of Related Literature 8

2.1     An Overview                                                                           8

  • Reasons for Motor Insurance 10
  • Brief History of Motor Insurance in Nigeria 11
  • Classification of Motor Insurance 12
  • Types of Cover Available 13
  • Method of rating Motor Insurance Business in Nigeria 17
  • Motor Claims Experience in Nigeria                                       23
  • Future Prospects of Motor Insurance in Nigeria 24

CHAPTER THREE                                                                                 

  • Research Design and Methodology 26

3.1     Sources of Data                                                                       26

3.1.1  Primary Data                                                                           26

  • Secondary Data 26
  • Population of the Study 26
  • Sample Size Used                                                                26

CHAPTER FOUR                                                                                    

4.0     Data Presentation and Analysis                                                        27

  • Presentation of Data 27
  • Analysis of Data 36

CHAPTER FIVE                                                                            

5.0     Summary of Findings, Recommendations and Conclusion     40

  • Summary of Findings                                                           40
  • Recommendations 42
  • Conclusion 44

Bibliography                                                                           45

Appendix 1: Sample of Questionnaire                                    46








          In retrospect a motorist was at liberty to drive his can on the highway without any form of insurance protection. But as the number of motor vehicles plying the roads increased, so did the accident rate and consequently death and injuries on the highways also increased.INSURANCE PRACTICE

In many cases, the victims of these motor accidents, even when courts might have asked the motorist to pay certain sum as compensation,  were unable to receive such award because the motorist was without adequate funds. This led, to public outage, and a solution had to be found. The only sensible solution was to make compulsory for every motorist to be insured so as to ensure that the victims of motor accidents obtained adequate compensation in appropriate case.INSURANCE PRACTICE

The first country that started this was Great Britain. Other Countries soon followed. The British Road Traffic Act 1930, introduced compulsory insurance for the first time and the Act made it an offence. For anyone to use or permit the use of a motor vehicle on a road unless there was in force a policy of insurance covering the liability of the motorist for death or injury to third party arising from the use of the motor vehicle. The idea of compulsory insurance was recognized quite early in West Africa, the extended to four Countries Nigeria, Ghana (then Gold Coast) Sierra – Leone and Gambia when they were all still British Colonies. Each of these Countries has now its own specific legislation on the subject.INSURANCE PRACTICE

In actual fact, modern insurance was introduced to Nigeria by European Trading Company which established Trading Post in Nigeria and got appointed as agents for insurer(s) based in London. During that time Nigeria Traders and Merchants of substantial status were given power to secure insurance business, issue cover notes mostly for Cargoes and also gave helping hand in Claims settlements.INSURANCE PRACTICE

Royal Exchange Assurance Company Limited established a Branch Office in the year 1921. This Company dominated insurance business for almost 30 years before the establishment of other Companies such as Provincial Insurance Company Limited now called West African Provincial Insurance Company Limited and Nigeria General Insurance Company Limited just to mention a few.INSURANCE PRACTICE

As said above, the British Parliament passed the Road Traffic Act 1930 and subsequently part (vi) of this Act was incorporated in Nigeria as the Road Traffic Act 1945 and this gave birth for the first time to legal backing of motor insurance Practice in Nigeria.INSURANCE PRACTICE



Like in any other business ventures, various problems are associated with motor insurance practice in Nigeria. It is therefore necessary to highlight the areas in which problems may arise with a view to identifying them and recommending solutions:

  • Motor Insurance law and Practice in Nigeria are derived from English Law and Practice. What difficulties are encountered as a result of this?
  • Compulsory aspect of motor insurance makes it mandatory for every motorist to carry at least Act liability cover for his vehicle to Ply on the public highways. What problems are associated with this?
  • There is public outery about insurance image in Nigeria. How has motor insurance practice contributed to this?
  • Inflation has affected claims costs. Have motor insurance premiums kept pace with inflation?



The objective of this study is to carry out a historical survey of origin, development, practice including claims procedures and impact as well as consequences of inflation on motor insurance practice in Nigeria with a view to recommending measures that would improve motor insurance practice in Nigeria.INSURANCE PRACTICE



This study is important for the following reasons:

  • Motor insurance is an aspect of insurance business that has considerable volume in terms of premium and number of policy holders. Its practice rightly or wrongly will enhance of more the image of insurance industry.
  • It will add to the body of knowledge available on this subject that can be referred to by future students, insurance practitioners and researchers.
  • It will be a partial fulfillment of the requirements for the Award of National Diploma in Insurance to me.



This study encompasses the whole of Nigeria but for souring of data the researcher will limit himself to Lagos State because the vehicle population is high that data derived from there will be representative of the entire nation.INSURANCE PRACTICE

Secondly, Lagos harbors the longest number of insurance companies in Nigeria and most of them have their head offices there. This will make the cost of carrying out this study within the means of the researcher.INSURANCE PRACTICE



Reading through this research work a more insurance reader may find some insurance terms difficult to understand. This may, therefore, make the project uninteresting to him/her. In order to overcome this problem, the terms used in the project are defined below:

  1. ACCEPTANCE: Intimation by the insurer to the propose of his intention Willingness to grant cover with its applicable terms.
  2. ACCIDENT: An accident is an unforeseen event. It is unexpected, not designed or excited Willingly by the insured or policy holder.
  3. CERTIFICATE OF INSURANCE: Evidence that an insurance is in force, especially for compulsory insurance such as motor insurance.
  4. CLAIMS: A demand for payment made by an insured in the event of a loss under his policy.
  5. CONTRACT: In legal parlance, contract is a legally binding agreement between two or more people.
  6. INSURANCE BROKER: He is a person who proposes to be an expert in insurance. He must be registered under the insurance Act of 2003 as an insurance broker. He acts as an intermediary between the insurer and the insured.
  7. INSURED RISK: This is the danger event which the insured insures against, example of such event relating to motor insurance are theft, accident resulting to injury or death and damage to the vehicles and fire.
  8. INSURED: This is the policy holder whom the insurer is to indemnify in case of loss as a result of occurrence of the event insured against.
  9. INSURER: This is the person that provides insurance coverage.
  10. LOSS ADJUSTER: He is an expert in insurance claims insurers engage him to investigate, assess and report on claims. He must be registered under the insurance Act of 2003 as a loss adjuster.
  11. PERILS: This is the risk insured against by the insured with the insurer eg. Theft, fire burglary, accident etc.
  12. POLICY: This is written evidence of an insurance contract.
  13. PREMIUM: The money paid by the insured to the insurer for the insurance cover provided by the policy.
  14. PROPOSAL FORM: Questionnaire prepared by an insurer with which to elicit details about proposed insurance.

THIRD PARTY: There are two parties to an insurance contract, the insurer and the insured. All others, who may seek to benefit or to be compensated under a policy are referred to as third parties. For example, an injured person by a negligent motorist is a third party with respect to the insurance of the motorist.INSURANCE PRACTICE

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