THE ROLE OF INSURANCE IN THE DEVELOPMENT OF STEEL INDUSTRIES IN NIGERIA

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ABSTRACT

This project deals with the projection of the Nigeria Economy, through the successful implementation of the various insurance cover on the risk involved in the production of steel products in Nigeria.

Prospecting for steel product is very risky and hazardous and some of the equipments used such as power plant, magnetic crane, automatic binding machines, centre. Lathe machine, are equipments used in dispatching of steel products and other risky ones, the risk from the use motor vehicles, public liability and marine risks on the importation of both consumable and non-consumable product.

The implication of any of these risks can not be over emphasized. Anyone of them would directly or indirectly result in a loss of production with a resulted economic loss.

In this regard, the insurance industry however provides different insurance covers for these risks. Covers available for the protection of steel production are: fire insurance, Group personal accident, vehicle fleet / staff motor fleet insurance cover, public liability cover, uniformed occupational pension scheme respectively. It was discovered that there is only one insurance company underwriting and covering all the risks involved in the production of the various types of steel products in Nigeria. As much emphasis is placed on steel products and considering the nature of high risks in the industries, it would be desirable if more insurance companies are involved in covering various risks facing the company and their staff during production processes.

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CHAPTER ONE

1.1 Introduction                                                          1

1.2 Statement of Problems                                           3

1.3 Objective of study                                                         4

1.4 The significance of the study                                  5

1.5 Limitation of study                                                         5

1.6 Definition of terms                                                         6

CHAPTER TWO

2.0 Review of related literature                                     8

2.1 SFEMED steel and insurance                                  8

2.2 Staff welfare and insurance                                            10

2.3 Importance  f brothers to steel companies                        10

2.4 Importance of pension scheme to the steel companies      11

2.5 Insurance covers available to the steel industries              12

2.6 Fire insurance cover                                                      14

2.6.1 Group personal accident Insurance Cover                      17

2.6.2 The Benefit of Individual Staff Motor Vehicle Fleet Cover 19

2.6.3 Public Liability Cover                                                   21

2.6.4 Marine Cover                                                              23

CHAPTER THREE

3.0 Research methodology                                                   27

3.1 Source of data                                                              27

3.2 Primary source                                                              27

3.3 Secondary source                                                          27

3.4 Method of distribution and collection of data                     28

CHAPTER FOUR

4.0 Presentation and analysis of data                                    29

CHAPTER FIVE

5.0 Summary of finding and Conclusion                                         38

5.1 Conclusion                                                                    39

5.3 Recommendation                                                          40

Bibliography                                                               49

Appendix

CHAPTER ONE

INTRODUCTION

Appreciation of the topic to be discussed will not be fully attained if a brief historical review of the steel industry is not given.

In the past, developing countries, Nigeria inclusive did not have a balance of economy and they urgently needed to be rescued from their under development trap. This they realized could not be achieved until they developed their own iron and steel industries, the bedrock of any economy. This recognition let Nigeria to develop its steel industry through this did not come into being until after the attainment of its independence.

In 1978, therefore, negotiations between Nigeria and foreign partners gave rise to the Delta steel company, Ajaokuta steel project and the three inland rolling mills at Osogbo, Katsina and Jos.

Thus, during the last 30 years, the federal government has been actively involved in the development of viable steel industry for Nigeria.

The Ajaokuta steel company Ltd, is an integrated blast finance producer of bars, shapes and medium structural. The present total in the company is in excess of N6 billion pre-sfem and definitely more if adjusted to reflect current replacement cost.

Any project with such a huge sum of money invested in it, which serves as the  bedrock of a nation’s economy is bound to pose a great concern and in an effort to provide protection, insurance is the best solution to it. Insurance is a business designed to absorb the risk of others, and remembering that risk is inherent I the production of steel, the steel industry, therefore, understands what risk is and appreciates the cushion provided by the insurance

The portifolio of insurance industry is made up of the following policies: fire, theft, burglary, machinery breakdown, group personal accident insurance to mention but a few.

With the provisions of these various covers each of the steel companies established is free to take up any of the insurance covers that best fits the risk faced. This security provided by the insurance industry goes along way to aid the economic development of the steel industries.

1.2 STATEMENT OF PROBLEMS

The occurrences of accident in the steeling Rolling mills are the major problem in the steel rolling company. It is a fundamental knowledge that accidents do not just happen, they are caused by human frailties as well as error of judgment. About 95% of the accidents are caused by human failures and mistakes while 5% could be traced to technical fault, disasters and other causes some of which are often regarded as act of God.

To this end, the fundamental danger in Rolling steel company include danger by various activities and sources such as the following.

Steel rolling operation itself

Operations of machines and equipment

Automatic machines

Crane loads, particularly the electric overhead travelling crane.

Materials headling and storage

Hot and burning substance

Use of hand and machine tools

Striking against objects

Fuel oil and chemical danger

Environmental problems such as noise control, proper ventilation.

1.3 OBJECTIVE OF THE STUDY

The objective of this study is to:

1. Examine the significance of the steel industry to the economic development of Nigeria
2. Evaluate various risks involved in the steel industry
3. Evaluate various insurance coverage’s available
4. Enlighten the policy holders (steel companies) on the other insurance documents and need for through study of their policy forms.
5. Fine out whether the various insurance cover ages available fully met the specification of the steel industries
6. Find out whether the steel companies actually took the full advantages of the services provided by the insurance companies.
7. Finally to make any necessary recommendations.

1.4 SIGNIFICANCE OF THE STUDY

It is important to undertake the study because it will help the researchers to find out what progress has been made so far by the insurance company in the development of steel industries in Nigeria. Information obtained will help both the insurance company (NICON) and the federal ministry of steel mine and power to find out areas that need to be improved upon.

Furthermore, it highlights the importance of insurance covers in steel companies  and the roles being played by the insurance companies through their various functional surveyors, to eliminate / minimize losses being faced by the staff and public in the premises.

1.5 LIMITATION OF THE STUDY

Since it is not possible  for the researcher  to go round all the steel industries in the country which comprises both federal and private companies respectively. In this regard, the study is limited to Osogbo steel Rolling company owned by the federal government of Nigeria.

The time allotted to this study was inadequate as such there was not enough time for data collection and analysis. However, the information obtained were thoroughly investigated without bias.

Financial aspect also needs to be considered seriously, the economic situation in the country generally has not been favourable to the researcher and this has imposed a limit to the scope of this work.

1.6  DEFINITION OF TERMS

1. Maritime perils – Sea / Navigation risks
2. Consumable product – input product used for production.
3. Billet – solid steel that can be melted for further production.
4. Permanent disability – inability to pursue any gainful employment.
5. Steel scrap – small / unwanted pieces of steel.
6. Spontaneous – burning caused by chemical changes inside the material not by the application of fire from outside.
7. Fog – vapour suspended in the atmosphere at / near the earth surface and it is difficult to see through.
8. Vermin – wild small animals which are very harmful to society.
9. Furnaces – enclosed space for meeting billet