Insurance Project Topics

Problems and Prospects of Extending Insurance Services to the Rural Areas

Problems and Prospects of Extending Insurance Services to the Rural Areas

Problems and Prospects of Extending Insurance Services to the Rural Areas

Chapter One


The objective of the study is to evaluate the performance of the Nigerian Insurance Industry in the extension of insurance services to the rural areas. The main objective of this work is to:

  1. To find out whether the insurance companies extend services to the rural areas or not.
  2. To find out why the insurance industry has not been accepted by the rural dwellers.
  3. To evaluate the causative factors of these problems and to provide possible solutions.
  4. To determine whether geographical factors and lack of infrastructural facilities affect the location of insurance companies in the rural areas.
  5. To find out the reason for lack of insurance culture and to offer strategies for developing insurance culture in the rural environments.
  6. To make useful recommendations based on the finding and then give possible solution to it.





Two years ago, in a rural community in Kwara State, Nigeria, we met Fatima1 a 62 year old grandmother who was struggling to care for herself and her two granddaughters aged three and nine. The children had been left with Fatima when their parents went to Lagos to look for work. Shortly thereafter, Fatima became ill, leaving her unable to work selling her homemade soybean cakes in the market for an income. She was forced to borrow money from other family members to pay for her medical expenses. When she could no longer borrow money she had to reduce spending on food items for herself and her grandchildren to buy medicine from the local medicine vendor in her village. Fatima, as the majority of poor Nigerians, was not covered by Nigeria’s National Health Insurance Scheme (NHIS) because she is not formally employed. She was suffering from severe hypertension, both of her granddaughters were malnourished and the youngest was suffering from malaria when a Hygeia Community Health Care (HCHC) enrollment officer arrived in her community a year later. By enrolling in the HCHC health insurance plan supported by the Dutch Health Insurance Fund (HIF) and implemented by PharmAccess, a nongovernmental organization (NGO), Fatima was able to receive the care that she and her granddaughter needed in the clinic, which had already been upgraded through the same program. With the appropriate treatment, her health stabilized and soon she was able to get back to work, earn a livelihood and care for her granddaughters. Fatima’s story is not uncommon in Nigeria and many other parts of the developing world. The inability to pay for health care expenses, which forces people to reduce spending on food or other basic needs, and the lack of access to quality care are unfortunately common realities seen by many poor and underprivileged. Falling ill can have devastating and long-lasting consequences especially for poor households, both through income loss and high medical expenditures. Data suggest that more than 150 million people globally suffer financial catastrophe every year due to out-of-pocket health expenditures. Nigeria has among the highest out-of-pocket health spending and poorest health indicators in the world. Most people would agree with the idea that all individuals should have access to health services and should not face financial hardship as a result of health care costs. Universal health coverage (UHC), the concept that encompasses these goals, has gained wide attention and support in recent years. How to achieve UHC however, is a more complex question with a variety of disparate viewpoints. In this paper, we discuss UHC in the context of Nigeria, a middle-income country that nevertheless is facing enormous health challenges. We discuss the constraints that have prevented Nigeria from attaining UHC to date. We then present promising evidence from large and small-scale insurance interventions in other parts of the developing world. Next, we describe a public-private partnership model of community-based health insurance currently operating in Nigeria and other parts of Africa and show evidence of the program’s ability to increase health care utilization, provide financial protection and improve health status in target communities. We contend that UHC in Nigeria can only be achieved by addressing both supply and demand-side constraints simultaneously. The solution must also include building on existing public and private institutions and informal networks, leveraging existing capital, and empowering clients and local communities. An innovative model such as the one presented here that has been implemented successfully in one Nigerian state, could be replicated in others; tackling this challenge one state at a time, to eventually achieve the goal of access to health care and financial protection for al


A broad range of risk-pooling mechanisms or insurance schemes are increasingly being utilized across the developing world to increase access and reduce the financial burden of health. 12 The number of evaluations of such efforts is growing and while findings are mixed, the overall findings on impacts are encouraging. In theory, we expect health insurance to contribute to achievement of UHC because it increases access and utilization by lowering the price of health care. Individuals will have better health if they utilize preventive and curative health care when needed and in a timely manner. 13 We review several studies that evaluate the impacts of programs ranging from NHI and SHI to CBHI on health care utilization and financial protection. We use a broader definition of UHC given the lack of agreement on the specific systems that might be utilized to achieve it and because we argue that a national system may not be the only answer to achieving universal coverage. A systematic review of the impacts of health insurance on health status in low and middle-income countries can be found in Giedion et al. 2013. The empirical evidence from various regions mostly supports the theoretical expectations described above. Several evaluations of a national health insurance program in Colombia, for example, find positive impacts on health care utilization. Trujillo et al. (2005) for example measure the subsidized regime component of the program finding the intervention to greatly increase utilization of medical care among poor and previously uninsured individuals. 14 Giedion et al. (2007) measure the impact of the contributory regime component of the same insurance scheme and find that for most of their access and use indicators, health insurance has a positive causal impact on access. 15 In a recent study, King et al. (2009) examine the impact of the randomly assigned Mexican universal health insurance program Seguro Popular. The phased rollout of the program provides an experimental design for a study of a program aimed at reaching 50 million uninsured Mexicans. This study, however, shows Seguro Popular to have no significant impact on the use of medical services but it is important to note that the study is based on a time span of only 10 months. 16 Galarraga et al. (2010) found that in Seguro Popular there was a reduction of catastrophic health expenditures of 49 percent for the experimental evaluation database (the same used by King et al. but using a different method) and 54 percent for the whole country based on a DHS-like survey. In addition, the authors found a reduction of out-of-pocket health expenditures for most types of services. 17 Findings in Asia are mostly positive. Chen et al. (2007) find that one year after the establishment of Taiwan’s National Health Insurance scheme, previously uninsured elderly people increased their use of outpatient care by nearly 28 percent. Previously insured elderly people increased their use by over 13 percent leaving a chance of nearly 15 percent which can be solely attributed to the National Health Insurance scheme. 18 In a study of a national rural health insurance scheme in China, Wagstaff et al. (2007) find that the scheme increased utilization of both inpatient and outpatient care by 20-30 percent but that the scheme had no impact on utilization among the poor.





Research design

The researcher used descriptive research survey design in building up this project work the choice of this research design was considered appropriate because of its advantages of identifying attributes of a large population from a group of individuals. The design was suitable for the study as the study sought to examine the problems and prospect of extending insurance service to rural areas in Nigeria.

Sources of data collection

Data were collected from two main sources namely:

(i)Primary source and

(ii)Secondary source

Primary source:

These are materials of statistical investigation which were collected by the research for a particular purpose. They can be obtained through a survey, observation questionnaire or as experiment; the researcher has adopted the questionnaire method for this study.

Secondary source:

These are data from textbook Journal handset etc. they arise as byproducts of the same other purposes. Example administration, various other unpublished works and write ups were also used.

Population of the study

Population of a study is a group of persons or aggregate items, things the researcher is interested in getting information for the study problems and prospect of extending insurance service to rural areas.  200 staff of NICON insurance was selected randomly by the researcher as the population of the study.




Efforts will be made at this stage to present, analyze and interpret the data collected during the field survey.  This presentation will be based on the responses from the completed questionnaires. The result of this exercise will be summarized in tabular forms for easy references and analysis. It will also show answers to questions relating to the research questions for this research study. The researcher employed simple percentage in the analysis.




It is important to ascertain that the objective of this study was to ascertain the problems and prospects of extending insurance services to rural areas.

In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in addressing the challenges of extending insurance services to rural areas.


This analysis aimed to provide a snapshot of the Nigerian population based on the Access to Finance in Nigeria 2010 survey findings, in order to gauge the potential for growth in the insurance market. The survey provides a wealth of information that could assist the market to better understand who their target market is, what their profile is and what innovation(in terms of products/distribution channels) would be needed to reach them. The current insurance reach in Nigeria is extremely low and the market is plagued by a number of challenges, many of them relating to distribution. Insurance is limited to the higher-income, formally employed male market and even those who are supposed to have compulsory insurance (e.g. vehicle owners) do not have it. The credit life insurance market is also underdeveloped. On the demand side, large numbers of the population are poor, many of them live in rural areas and financial literacy, awareness of and trust in insurance is low.


Development insurance should be encouraged in Africa and most especially Insurance Market, other emerging markets in African can follow suit to help bring the benefits of insurance to the people. The importance of developmental insurance cannot be over emphasized given the array of its benefits both to the insurance industry and individuals One important thing about the scheme is that it is built on the principle of social welfare and thrift. Insurance marketers are hereby advised to offensively use the models proposed in this write up when marketing any type of developmental insurance scheme. These models includes the cultural norms theory of communication, public relations transfer process models, attitudinal/KABP survey model, pedagogic models and development communication models People orientation towards insurance needs to be changed through proper attitudinal/change communication program. This will help in the desired insurance culture in Nigeria. Development insurance scheme has come to alleviate the sufferings of the common man. And to ensure effectiveness in the practice of development insurance scheme, both government and insurance companies should be deeply involved through appropriate supervisory strategies and education.


Quality of the service experience is heavily dependent on staff customer interpersonal relationship. Companies need to treat their employee well if customers are to be served well by their employees. To understand the prospects for insurance companies in rural area, it is very important to understand the requirements of Nigeria’s villagers, their daily lives, their peculiar needs and their occupational structures. The rural market offers tremendous growth opportunities for insurance companies and insurers should develop viable and cost- effective distribution channels, build consumers awareness and confidence.


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