RECAPITALIZATION AND CONSOLIDATION OF INSURANCE COMPANIES IN NIGERIA
CHAPTER ONE
1.1 Preamble
Most insurance companies lack the criteria mass to survive long term. It is said that the sector is highly fragmented and rife with over with over capacity. With this, we do not see how most of the smaller players can effectively compete and remain profitable in the insurance environment.
Before going further into the re‑capitalization of insurance companies in Nigeria, it is only important and pertinent to understand the meaning of insurance and what it entails and also the meaning of re‑capitalization.
Insurance is defined according to Isenmila (2002) as “a contract by a person called the insurer or assured agrees in consideration of money paid to him called the premium by another person called the insured or assured, to indemnify the latter against loss resulting to him on the happening of certain events”. Insurance is a social device providing financial compensation for the event of misfortune or unforeseen happenings. It is agreed towards efficient risk management through risk transfer, where the burden of risk is borne by a company set aside for that purpose. Insurance companies bear the burden of their clients when incidents of risk insured against occur; thereby receiving their clients from the hazards by indemnifying them with the actual value necessary and sufficient to put them back to their former position of business, that is nothing less or more than they were.
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