Title page

Approval page



Table of content



1.0    Introduction

  • Background of the study
  • Objectives of the study
  • Statement of problems
  • Research questions
  • Research hypothesis
  • Significance of study
  • Scope of the study
  • Limitations of the stud
  • Definitions of terms 


2.1    Literature review

2.2    Reasons for insurance penetration to the Grassroot levels

2.3    Reasons why insurance are not full penetrated in the

level in the country

2.4    Supervision of the commission

2.5    Reasons for regulation

2.6    Meaning and strategies of marketing development restructuring initiative of national insurance commission towards insurance penetration to grassroot.

2.7    Micro-insurance means of penetrating insurance to grssroot

2.8    Islamic Complaint insurance means of penetrating insurance to grassroot

2.9    Agricultural insurance means of penetration insurance to grassroot


  • Research Methodology

3.2    Primary source of data collection

3.3    Population of the study

3.4    Sample size

3.5    The sample method used

3.6    Method of data analysis

3.7    Formula used


  • Data analysis
  • Analysis and evaluation of data


5.0    Summary, Conclusion and Recommendation

5.1    Summary

5.2    Conclusion

5.3    Recommendation


Appendix 1



The aim of this project is to analyze the role of the National Insurance Commission in depending insurance service among the vast population of Nigeria. This can be achieved through its oversight functions and use of innovation tools like MOR, micro insurance, Islamic compliant insurance and Agricultural Insurance to meet the majority of Nigerians living in the rural areas. In the course of the study many problems encountered are to be solved by the recommendations that will ensure adequate coverage of the limitations. The type of research method used is primary source of data collection.



National Insurance Commission is a body that ensure is effective administration, supervision, regulation and control of insurance industries in Nigeria.

The national insurance Commission (NAICON) under the able watch of Mr. Fola Daniel is on top of the situation. The industry is poised to take advantage of serial despoliation and corruption enthroned every where in our economic landscape that poll into insignificance value that enables the society. The insurance consumer Association of Nigeria (INSCAN) and NGO ably led by rear Admiral Isaac Areola is protecting the insurance consumer in Nigeria against unfair practice from insurers.

Insurers should therefore enhance after. Sale service, such as prompt payment / settlement of claims as well as effective intermediation model. And also develop environmentally friendly products, based on market research and ensure an efficacious marketing that will speak to the customers in the grass root.

The bottom line for effective insurance coverage is a prompt payment of claims. Insurance operator should ensure that they take settlement of claim seriously for that will guarantee adequate penetration of insurance to grass root. The commissioner for insurance Fola Daniel sates that the easiest way to attract the public to patronize insurance is treating those who are already insured through prompt payment of claims. “If one tells his friend that his insurance company did not pay claim after his loss, that single complaint is capable of stopping more than 20 peoples from buying insurance in future” in his statement, he said that prompt payment of claim remain the best instrument. For insurance awareness and penetration expatiating on its utmost importance, that commissioner state that NACCOM will continue to ensure that operators live up to their claim responsibility adding that the commission had received 86 claims complaint out of which 52 valued at 1.2 billion have been resolved and 34 in court. He read the ‘riot act’ that the axe will be yielded on operators who consistently fail to settle discharged claim promptly by losing their license. Insurers had been mandated to administer claim. In accordance for that will enable those at grassroot to embrace insurance and in order to standardize insurance practice.

Moreover, the weak legal framework for the regulation and supervision of insurance industry in Nigeria has been attributed to the poor public perception of the sector; low level of awareness amongst the populace; high political economic and financial systemic risk; non remittance of accumulated premium and investment losses resulting from decline in insurance penetrations.

Furthermore, a lot of companies are being built in the urban area forgetting that many Nigerian are living in the rural area without having the knowledge of what insurance is all about and are eager to boy the policy if well explained.

According to Mr. Fola Daniel, he said that derive to penetrate insurance into the grassroot will see the insurance market growing in an accelerated rate of hitting 8:64% in the net four years. According to the commissioner of insurance, premium income will increase from N300 billion in 2012 to N1 trillion in 2017, motor insurance will increase by ten percent (10%), life insurance by three percent (3%) and oil and gas by two and half percent 2 ½ % .

The industry’s contribution to the Gross Domestic product will be three percent (3%) and the insurable population will increase to twenty-two percent (22%). The Nigeria insurance penetration is expected to rise above six percent (6%) when compared to Kenyan 3.2% and South African 15%.


The Nigerian Insurance Industry has come of age, the genesis of the industry in 1921 had gone through transformation. It morph and from the insurance companies Act 1961, the insurance (miscellaneous provision) Act 1964, the companies decree 1968, the insurance decree 59 of 1976, the insurance Decree 58 of 1991, insurance decree 2 of 1997 to the present insurance Act 2003. There is still room for amendment following strident calls for more consolidations was upgraded to National Insurance Supervision. Board headed by Chief Oladipo Bailey who become the first commissioner of insurance when the National Insurance Commission was set up by Decree N0 1 of 1997, He was later replaced by Barr. Emmanuel Chukwulozie and the incumbent Fola Daniel.


The following are the objectives of the study,

  1. To examine the role of the National Insurance Commission towards Insurance penetration to the grass root.
  2. To lay an emphasis on the strategies and way through which National Insurance Commission is using towards penetrating insurance to the grass root.
  3. to know how insurance growth can contribute to GDP of the country.


Most of the problems confronting the commission from carrying out efficient administration on insurance industries in Nigeria are inexperienced management team, inadequate fund for carrying out the roles of the commission etc.


  1. Has National Insurance Commission contributed to the growth of insurance industries in Nigeria?
  2. Does the level of the commission influence the performance of the industries?
  3. What is the role played by the commissioner in Nigeria?

4       What are the efforts of the commission to penetrate insurance to grass root.

5       What are the achievements of the commission so far in the country?


HO:   That NACCOM contributes immensely to the growth of the industry in Nigeria.

Hi:    That NACCOM does not contribute to the growth of the industry in Nigeria

Ho:   That the function of the commission is fully executed.

Hi:    That the function of the commission is not fully executed.


The significance are as follow

  1. To educate the reader of this project about the role of National Insurance commission and the method and strategies used towards insurance penetration to grass root.
  2. To alert the commission on several ways of maintaining a strong administration.


This study will cover only the National insurance Commission zonal office Enugu, Nigeria and emphases on the roles they play towards insurance penetration. The analysis and conclusion will base on the data supplied by the commission.


There are numbers of factors which militated against the smooth conduct and execution of this research work they are as follows:

–        Difficulties in obtaining relevant information about the commission.

–        The scarcity of fuel, hence the high cost of transportation limit the researcher’s movement to various places where necessary information for the research work could be obtained.

–        Financial and time constraint. The research work would have not been carried out as one would have wanted some other method of collecting information could not be used for example observation of work and asset could not be effectively carried out.


  1. A) NATIONAL INSURANCE COMMISSION: Is a body that ensuring efficient administration, supervision, regulation and control of insurance business in Nigeria.
  2. B) CO-OPERATIVE SOCIETY: This is an insurance association registered under any enactment or law relating to co-operative society. They are not allowed to provide cover to non members. It is guided by a co-operative principle of democracy, equality, religion and political neutrality patronage rate and open membership.
  3. C) INSURANCE BROKER: They are experts and professionals in the field of insurance and have a higher duty of care to their principal.

Thy are described as agent of the insured.

4. D) INSURANCE AGENT: They connect the insurer and the insured in the insurance market. They are not professionals or experts. They are described as the agent of the insurer, they bring business to the insurer and advise the insurer on market situations.



Review of the related literature to the topic “The Role of National Insurance Commission towards insurance penetration to Grass Roots” has been discussed by many experts in the industry; some of the experts who highlighted on these are below.

According to Mr. Daniel (2010) said that the success of the various strategies adopted by the National Insurance Commission (NAICOM) to ensure insurance penetration in Nigeria in 2010, most especially through the most touted market development and Restructuring initiative (MDRI) hinge on insurance intermediaries such an insurance Broker and Agent. This was the submission of the commissioner for insurance and boss. National Insurance commission of the commissioner for insurance. (NAICOM) Mr. Daniel, while reading his address at a workshop on “Downscaling of (MDRI) implementation” to the insurance intermediaries in the countries. According to him, he success of the strategies would depend on the cooperation and support of all stakeholders, stressing that (NAICOM) does not expect less from all concerned bodies. Mr. Daniel revealed that several workshop and seminal has been organized to initiate all stakeholder on the strategies to implement the MDRI by first quarter of 2010. Mr. Daniel said that the commission would embark on launching of the compulsory insurance in six geopolitical zones inclusive of Lagos and Abuja. He also disclosed that thereafter the enforcement team already put in place in all the 36 states of the aeration would commence work on the enforcement of the compulsory insurances.

Mr. Daniel said that the brokers and agency system that are about to revive has a crucial roles to play in ensuring the success of the (MDRI) programme given their business network. They should be able to utilize the large size of their network spread across the country to promote the good image of the industries and depend insurance penetration to grassroot.


  1. i) To capture the potential subscribers form the garssroot.
  2. ii) Bringing insurance closer to the grassroot level

iii)    To increase insurance contribution to the Gross Domestic product to the nation.


The problem is 100 percent form the operators and the regulators. According to a report submitted to NAICOM at the end of feasibility study for sale of micro-insurance, it will interest you to know that the industry have been missed for so many years believing that Nigerian don’t like insurance. The report revealed that 40 percent of Nigerians don’t have any opinion about what insurance is all about, either positive or negative. The insurers are busy asking them what is insurance what does an insurer do and others, but they don’t know even at the micro-insurance level, some of them are saying may be if you want to buy a car and your money is not enough then you can go to insurance company to help balance the money, imagine people with such understanding. When the industries were dong enforcement of compulsory insurance about 100 percent of people who don’t have insurance were ready to buy insurance right at the sport.

There are some basis problem from the part of the part of the operators and the regulators.

The problem of access to insurance usage the mortgage sector has not seen the usefulness of insurance in their business and such is a serious problem. Low level of awareness is another problem and the irrelevant products in the market are another major problem affecting the effort of the NAICOM to penetrate insurance to grassroot.


In order to arrive at a proper and efficient regulation and control of insurance institution in the light of provision, registration, operation and collection of assessment levy etc. The machinery in place for supervision must be adequate and capable to perform a thorough supervision. The provision of section 31 to 35 are therefore important if the activities of the commission would not be grounded to a half by a multi famous litigation the decrees establish on inspectorate department for the commission which shall be responsible for carrying out the supervisory function in aspect of insurance institutions. The commission for this purpose shall.

  1. Authorize not less than once in 2 years an inspection, reexamination or investigation of every insurance institution for the purpose of satisfying the commission as to whether or not that provision of the Decrees or any regulation are been comply with.
  2. Authorize one or more inspector or other officer to inspect, examine or investigate any aspect of the insurance business and
  3. Submit to the minister a half yearly report on the activities of the inspectorate department constitute an important organ of the commission and the image making of the commission can either be made or married by the department generally, an inspector is empowered to examine, investigate the book and affairs with right of access to the book of account, document and voucher book of insurance institution.


Insurance is being regulated because of the following reasons.

  1. For future performance: Controlling and managing an insurance company involves custody of large sum of money belonging to policy claimants, beneficiary of policyholders and shareholders.

The financial collapse of insurance company can involve serious political repercussion. The insolvency of an insurer (particularly a life assured) can be traumatic and this makes the government to regulate the industries through National insurance Commission.

  1. Complexity nature of the business: Government regulates the industries in order to avoid difficulties in transacting insurance business in Nigeria.
  • Unknown future cost: The establishment of price for insurance is a complex activity and involves the incorporation of mathematical analysis into competitive business decision process. Unlike computer and motor vehicles, insurance is a product for which the cost of good sold is not known at the time the price is set, indeed, even estimating the ultimate cost can be very difficulties.
  • Violation of public Trust: As in any line of business, violation of public trust in insurance. These include failure by the insurer to live up to the contract provision formulation of contract that are misleading and that seem to offer benefit they do not cover.


Market development and restructuring initiative is one of the strategies and weapon which the national insurance Commission was using towards penetrating insurance to grassroot. The (MDRI) of NAICOM was aimed at addressing the issue of compulsory insurance product, insurance Agency system, fake insurance institution and Risk and Risk Base supervision.

The project was structured as a medium term plan between 2009 and 2012, of installing the first phase of the necessary reforms in the area of industry capacity, market. The National insurance Commission (NAICOM) adopted market development and restructuring initiative (MDRI) meant to derive insurance penetration in the country has recorded about 75 percent success. This development said that the industries operators are leading the industries in the right direction.

The managing Director, Risk Guard African Nigeria Limited Mr. Yemi Soladoye disclosed that the initiative is a turning point in the insurance industry because operators, regulations service provider and government have realized that there is something going on in the industry. Market development and restructuring initiative is a turning point because it was from that stage that insurance operator saw the regulator leading the market.


The National insurance Commission plan to depend insurance penetration using micro- insurance means. The commission has entered into partnership with relevant organization to bring microinsurance training closer to Nigeria insurance operators and the practitioners. The commission is partnering with Nigeria insurance Association (NIA) and other agency to organize an “international Microinsurance conference billed for Abuja between September 10 and 11, 2013. Organizers of the conferences said it would serve as an incubator of new idea where key stakeholder in the Nigeria insurance market and related parties will discuss approaches for promotion and practical implementation of micro- insurance. The conference will provide opportunities for policy makers, private sectors, innovators, representative form civic society and technical assistance provider to network with their peer, discuss their experience, exchange knowledge from good practice and discuss innovative approaches to promote microinsurance in Nigeria and to enhance its penetration to grassroot in Nigeria.

The microinsurance initiative is one of the programme of (MDRI) designed to increase premium generation and deepen insurance penetration, soladoye, consultant to (NAICOM) on microinsurance in (2009) predict that over N60 billion opportunities to be taped by unsure and panacea poverty alleviation research according to him had revealed that microfinance bank, the chairman National Association of microfinance banks (NAMB) Olufemi in 2010 appealed to underwriting firms to extend the service to the grassroot where micro- insurance client reside to depend insurance in the country.


It is an insurance contract which rely on a pact among participant to guarantee each other without element of gambling which is prohibited by the Koran. The participant invest in fixed sum for a fixed term to be distributed without discrimination according to traditional underwriting principles. They must incorporate mudarabah and Takaful principle to be compatible with Islamic doctrine. To deepen insurance penetration, there is need to develop insurance products that are complaint to Moslems. The Nigeria population almost has equal population proportion of Christian and Moslem. The Koran (The source and glide for all social and economic decision and institution for devout Moslem) proscribes the payment of interest (RIBA) and gambling. Like Western banking, western insurance may be dismissed by devout Muslim as a team of usury or gambling (Al-kurd 1995). To be compatible with Islamic principles Islamic insurance must incorporate mudarabah and Takaful.


Is a form of partnership where one party provides the fund while another provides the expertise and management. The parties share any profit on a prearranged basis. Islamic insurers invest fund according to the Sharia (no fixed income securities, no investment in certain companies such as breweries). Business building a profit-sharing (rather than interest paying), pooling arrangement, they fully respect the Riba-prohibition. According to Al-kurd David (1995) stated that the Islamic insurance practice will contribute allot towards insurance penetration to the grassroot and also help in creating more awareness to those with the ignorance of what insurance is all about and what it can contribute to them.


The Nigeria Agricultural insurance corporation Decree No 37 of 1993 established Agric Insurance in Nigeria in order to enhance the development and penetration of insurance of grassroot. The scheme has the function of implementing, managing and administering the agricultural insurance scheme established by section 6 of this Decree.

  • To subsidize the premium charge on crop and livestock
  • To encourage institution lender to lend more for agriculture in production in Nigeria.

One of the cardinal programme of Obasanjo led administration when it came on board in 1999 was radical development of agriculture in all its ramification. Not only as a veritable way bringing about the all round development of Nigerian states from the very beginning, the scheme provides cover to only two crop items-maize and rice, two livestock items-cattle and poultry and some commercial business like farm building, machinery and equipment. The cover has since been extended to cover more items namely 21 crop items, 9 items of livestock and 12 types of commercial businesses. And at the present, efforts are being intensified to increase the number of items under cover to include fisheries, perishable vegetable and more agricultural product.

The Nigeria Agricultural insurance cooperation is quite different from others and is always there for the farmers (NAIC). They pay the farmers their compensation adequately.

According to the managing Director Mr. Kwati (NAIC) is living up to its responsibilities, he always emphasize that the prompt payment of claim is always the cardinal philosopher of the cooperation. The scheme is a thorough means by which the penetration of insurance to grassroot will be achieved.

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