AN APPRAISAL OF THE IMPACT OF PRINCIPLES OF UTMOST GOOD FAITH IN THE PROMPT SETTLEMENT OF INSURANCE CLAIMS IN NIGERIA

CHAPTER ONE

GENERAL INTRODUCTION

1.1         INTRODUCTION

Insurance is a form of risk management, primarily used to hedge against the risk of a contingent loss; in essence, insurance is simply the equitable transfer of a risk of a loss, from one entity to another, in exchange for a premium¹. The history of insurance could be traced to early methods of transferring or distributing risk by Chinese traders as early as the 3^rd millennia BC. These merchants travelling treacherous river rapids would cleverly distribute their wares across many vessels, whereby their losses are distributed in which the vessels that are saved from capsizing compensate for the ones that are capsized². The modern profit insurance manifested in Babylon almost 2000 years B.C. in a contract of loan of trading capital to traveling merchants³. The contract contained a clause that the risk of loss due to robbery in transit was borne by the party providing the loan. In consideration for bearing the risk, the lender calculated interest on the loan at an exceptionally high rate.⁴

The Greeks and Romans introduced the origin of health and life insurance around 600AD, when they organized guilds/benevolent societies such as (collegian and military societies) which afforded members certain benefits, such as proper burial rites, or a financial contribution towards burial costs or traveling expenses or members of the army. In exchange for this benefit, members of the society made regular contribution to it.⁵