NATIONAL INSURANCE COMMISSION AND CORPORATE GOVERNANCE IN NIGERIA, 2016

ABSTRACT

This study examines the role played by NAICOM in the institution of good corporate governance culture in the Nigerian insurance industry. This was done by determining how successful the NAICOM, as the insurance industry regulator, has been in instilling a sound corporate governance culture in the industry. The Nigerian insurance industry have over the years been plagued by under-capitalization, poor human capital and professional skills, poor returns on capital, insurance premium flight, trust and confidence issues and poor corporate governance structures. However, with the introduction of the code of good corporate governance for the insurance industry, it is expected that these factors inhibiting the growth of the industry will be mitigated. In order to conduct the study, a survey research design was adopted, using questionnaire and interviews as the major instruments for collecting data. The data so collected was analysed using ANOVA SPSS tool. At the end of data gathering and analysis, the study revealed that NAICOM and, in particular, the code of good corporate governance has played a key role in the institution of relatively good corporate governance standards in Nigeria’s insurance industry. The study thus recommends that NAICOM 2009 code be amalgamated with other industry specific codes and given statutory backing, such that breach of the provisions may attract penalty.

TABLE OF CONTENTS

COVER PAGE                                                                                                                      i

TITLE PAGE                                                                                                                         ii

DECLARATION                                                                                                                   iii

DEDICATION                                                                                                                       iv

APPROVAL PAGE                                                                                                               v

ACKNOWLEGEMENTS                                                                                                      vi        

ABSTRACT                                                                                                                           vii

TABLE OF CONTENTS                                                                                                       viii

LIST OF TABLES                                                                                                                 xi

LIST OF ACRONYMS                                                                                                         xii

LIST OF APPENDICES                                                                                                        xiii

CHAPTER ONE: INTRODUCTION             

1.1 Background of the Study                                                                                                  1

1.2 Statement of the Problem                                                                                                  3

1.3 Research Questions                                                                                                          4

1.4 Objectives of the Study                                                                                                    4

1.5 Research Hypotheses                                                                                                        5

1.6 Significance of the Study                                                                                                 5

1.7 Scope of the Study                                                                                                           5

1.8 Limitation of the Study                                                                                                    6

1.9  Definition of Terms                                                                                                           6    

CHAPTER TWO: LITERATURE REVIEW

2.1 Introduction                                                                                                                      7

2.2 Theoretical Framework                                                                                                     7

2.2.1 Agency theory                                                                                                                7

2.2.2 Stewardship theory                                                                                                        8

2.2.3 Resource dependency theory                                                                                         8

2.2.4 Transaction cost theory                                                                                                 9

2.2.5 Stakeholder theory                                                                                                         10

2.3 Conceptual Framework                                                                                                    10

2.3.1 Corporate governance                                                                                                   10

2.3.2 Benefits of good corporate governance                                                                         12

2.3.3 Standards of corporate governance in Nigeria                                                             15

2.3.3.1 OECD principles of corporate governance                                                                17

2.3.3.2 IAIS insurance core principle on corporate governance                                           18

2.3.3.3 NAICOM code of good corporate governance                                                           19

2.3.3.4 How the OECD and IAIS principles compare with NAICOM’S                                28

2.3.4 Level of compliance with NAICOM code in the insurance industry                             30

2.3.5 State of corporate governance in the insurance industry                                              31

2.3.6 Impediments to achieving international corporate governance best practice              34

2.4 Review of the Theories                                                                                                    39

CHAPTER THREE: METHODOLOGY

3.1 Introduction                                                                                                                      41

3.2 Research Design                                                                                                               41

3.3 Population of the Study                                                                                                    41

3.4 Sample of the Study                                                                                                         41

3.5 Sampling Techniques                                                                                                        42

3.6 Method of Data Collection                                                                                               42

3.7 Instruments for Data Collection                                                                                       42

3.8 Methods of Data Presentation and Analysis                                                                     43

CHAPTER FOUR: RESULTS AND DISCUSSION

 4.1 Introduction                                                                                                                      44

4.2 Data Analysis                                                                                                                    44

4.3 Summary of Findings                                                                                                       50

4.4 Discussion of Findings                                                                                                     50

CHAPTER FIVE: SUMMARY, CONCLUSION AND RECOMMENDATIONS

5.1 Summary                                                                                                                           52

5.2 Conclusion                                                                                                                        54

5.3 Recommendations                                                                                                            54

REFERENCES                                                                                                                      56

APPENDICES                                                                                                                       60