1.1 BACKGROUND OF THE STUDY
Nigeria’s economy before independence and shortly afterward largely depended on agriculture. This is because a good number of its citizens are farmers. Intact about 70% of the Nigerian populace then were basically farmers and this goes a long way to show that Nigerians are poor people. Agriculture then was her only source of foreign exchange through the sale of cash corps.
Shortly after independence and the civil war, Nigeria economy changed as a result of oil boom in the early 705. This caused the total neglect of is agricultural sector and other mineral resources which are blessed with, the boom attracted foreign investors in so many sectors, they includes, bank, insurance companies and oil producing companies etc. Among the early oil producing companies to exploit its shores of Nigeria include British Petroleum Company, Uni Petrol etc.
Petroleum is a product of crude oil which is found a black substance naturally underground.
The oil industry is an important aspect in the monetization process and industrial growth of all nations which serves as source of energy to most of the modern power generators and machineries.
Petroleum is also serves as sources of revenue and also contributing to the national output. But due to the fact that our country’s economy depends largely on oil and it’s by product based on chemicals derived from oil sector and natural gas. It is invariably pertinent that one should consider the risk involved and the types that the petroleum industry as a whole are exposed.
One should be thinking of the ways to reduce the risk involved both in the offshore and onshore operations. Insurance cover is an appropriate way of handling and reducing those risk exposures that the oil companies experience. The insurance companies have now the capacity to cover most of the risks being envisaged by the petroleum industry.
Insurance covers losses or destruction of properties, equipment and machineries. Insurance also essentially pays claims on fire out break, theft, oil spillage etc. or temporal disability and medical expense of the employee, or damage to their parties’ properties and make good any court judgment arising out of their general negligence of any sort.
Insurance most important function is the indemnifying of oil industry in any loss. It prevents the industry form being handicapped financially after any loss or to stop production.