An Evaluation of the Marketing Strategies of Nigerian Insurance Companies

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INTRODUCTION

To achieve set organizational goals and objectives, companies conceptualize, design, and implement various strategies. These strategies can be corporate, business, or functional. Marketing strategies constitute one of the functional strategies amenable to application by contemporary companies in order to be efficient and effective.

Marketing has been defined and conceptualized in myriads of ways, depending on the author's background, interest, and education (Osuagwu, 1999). For example, marketing can be seen as a matrix of business activities organized to plan, produce, price, promote, distribute, and megamarket goods, service, and ideas for the satisfaction of relevant customers and clients. Relatedly, Achumba and Osuagwu (1994) posit that marketing is important for the success of any organisation, whether service- or product--oriented.

Insurance is a mechanism for reducing the uncertainty of an individual/organization through the exchange or transfer of specific risks to the insurer who offers a form of economic restoration, albeit partly, to the insured for loses incurred. Meidan (1984) has argued that the insurance services sector constitutes a financial service industry that has currently been changed by aggressive strategic marketing behaviour.

Insurance business behaviour in Nigeria, historically, can be traced to the actions of British merchants in 1874. These British merchants commenced their insurance business activities as agents for insurance companies in Britain, the major area of business being marine insurance. These agents operating in Nigeria packaged and organized insurance covers for imported and exported products.

In 1921, the Nigerian insurance industry got a prop with the establishment of the Nigerian branch office of the Royal Exchange Assurance (REA) of London. This Nigerian branch office of the REA formed the foundation of the present Royal Exchange Assurance of Nigeria (REAN), which is the oldest insurance company in Nigeria. The REAN operated as a monopolist in the Nigerian insurance industry for about twenty (20) years before other companies entered the insurance industry.

According to Egerue (1994), indigenous Nigerian insurance companies were not profoundly entrepreneurial at the earlier stage because of the following reasons:

1 Lack of trained manpower

2 Intense competition from superior foreign companies.

3 Lack of adequate and sufficient capital base on the part of indigenous insurance companies.

4 Poor infrastructural development.

5 Poverty of the Nigerian capital market.

Therefore, early indigenous Nigerian insurance companies were owned and operated by regional governments, and the patronage of these insurance companies was mainly from the regional governments that owned them. The relatively good performance of these regional insurance companies, in addition to the liberalized regime of governments of the day pertaining to regulations in the industry, resulted in the proliferation of insurance companies. This proliferation tasked insurance companies to design and implement efficient and effective marketing strategies, in addition to other strategies, in order to achieve set organizational goals and objectives.

The Nigerian economy, presently, is experiencing downturn in all relevant indices of growth and development. The democratic regime of the time is striving to design policies and strategies that will rescue the Nigerian economy out of the woods. Thus, there is an increasing attention to all sectors of the economy, including the Nigerian insurance industry. The regulation of the Nigerian insurance industry by government started in 1961 with the enactment of the insurance companies Act, 1961. This Act has been modified many times. Presently, the Nigerian Insurance Commission Decree, 1997, regulates insurance practice in Nigeria.

However, with few functional and reasonably competitive companies in Nigeria, low indigenous/local investment, and little foreign investment in the Nigerian economy, existing insurance companies in Nigeria compete fiercely for insurance businesses. …