Abstract

The importance of motor vehicle insurance to car owners in Cameroon has been one of the greatest factors that have led to the growth of the insurance industry in Cameroon and to our community today.

Even though this part of the insurance industry has boasted the industry, the managers and agents still need to work very hard on the other parts of this sector and even to take this part to another level and not to feel that they have arrived. They need to train more and competent agents to work in the industry, pay claims (Indemnity) to the insured whenever there is a loss which will encourage other car owners who still see this insurance as a modern scam to run and acquire their own insurance cover.

Chapter one deals with the introduction, which presents the background of the study, statement of problems, the objective of the study, research question, hypothesis of the study, the significance of the study, the scope of the study, and definition of terms.

Chapter two deals with the introduction or literature review or review of related literature. Chapter three is the background history of the company, the organigram of the company, and sources of data collection, in chapter four is data collection and interpretation then chapter five is the conclusion and recommendation.

CHAPTER ONE

INTRODUCTION

1.1 Background of the Study

Insurance in some form is as old as a historical society. So-called bottomry contracts were known to merchants of Babylon as early as 4000–3000 BC. Bottomry was also practiced by the Hindus in 600 BC and was well understood in ancient Greece as early as the 4th century BC. Under a bottomry contract, loans were granted to merchants with the provision that if the shipment was lost at sea the loan did not have to be repaid.

The interest on the loan covered the insurance risk. Ancient Roman law recognized the bottomry contract in which an article of the agreement was drawn up and funds were deposited with a money changer. Marine insurance became highly developed in the 15th century.

Fire insurance arose much later, obtaining impetus from the Great Fire of London in 1666. A number of insurance companies were started in England after 1711, during the so-called bubble era. Many of them were fraudulent, get-rich-quick schemes concerned mainly with selling their securities to the public.

Nevertheless, two important and successful English insurance companies were formed during this period—the London Assurance Corporation and the Royal Exchange Assurance Corporation. Their operation marked the beginning of modern property and liability insurance.

No discussion of the early development of insurance in Europe would be complete without reference to Lloyd’s of London, the international insurance market. It began in the 17th century as a coffeehouse patronized by merchants, bankers, and insurance underwriters, gradually becoming recognized as the most likely place to find underwriters for marine insurance.

Edward Lloyd supplied his customers with shipping information gathered from the docks and other sources; this eventually grew into the publication Lloyd’s List, still in existence. Lloyd’s was reorganized in 1769 as a formal group of underwriters accepting marine risks. (The word underwriter is said to have derived from the practice of having each risk taker write his name under the total amount of risk that he was willing to accept at a specified premium.) With the growth of British sea power, Lloyd’s became the dominant insurer of marine risks, which were later added fire and other property risks.

Today Lloyd’s is a major reinsurer as well as the primary insurer, but it does not itself transact insurance business; this is done by the member underwriters, who accept insurance on their own account and bear the full risk in competition with each other.

The first American insurance company was organized by Benjamin Franklin in 1752 as the Philadelphia Contribution ship. The first life insurance company in the American colonies was the Presbyterian Ministers’ Fund, organized in 1759. By 1820 there were 17 stock life insurance companies in the state of New York alone, bad practices developed: dividends were declared that had not been earned, reserves were inadequate, advertising claims were exaggerated, and office buildings were erected that sometimes cost more than the total assets of the companies. Thirty-three life insurance companies failed between 1870 and 1872, and another 48 between 1873 and 1877.

Insurance in Japan is mainly in the hands of private enterprise, although government insurance agencies write crop, livestock, forest fire, fishery, export credit, accident and health, and installment sales credit insurance as well as social security. Private insurance companies are regulated under various statutes.

Major classes of property insurance written include automobile and workers’ compensation (which are compulsory), fire, and marine. Rates are controlled by voluntary rating bureaus under government supervision, and Japanese law requires rates to be “reasonable and nondiscriminatory.” Policy forms generally resemble those of Western nations. Personal insurance lines are also well developed in Japan and include ordinary life, group life, and group pensions. Health insurance, however, is incorporated into Japanese social security.

Insurance came to Cameroon in the late ’80s and early 90’s when the French were our colonial master. So the insurance policies or laws used were that of French. Their main objective was to protect foreign investors. As of 2003, there were a number of foreign and domestic insurance companies doing business in Cameroon.

Cameroon was one of the fourteen French-speaking African nations that adopted a common code with respect to the insurance sector. The enforcement of these regulations led to the closure of some weak insurance companies and the restructuring of the sector. It is important to know that the CIMA CODE is the law that regulates insurance activities.

In Cameroon, there are many types of insurance cover which include; Life insurance, Property, Automobile insurance, and others. Life insurance is a contract between two parties that is the insured and the insurer where the insurer promises the insured (the Beneficiary) a sum of money in exchange for a premium, upon the death of the insured person. It should be noted that this is the only insurance policy where the principle of indemnity does not apply there.

The policyholder pays the premium either regularly or as one lump sum. Other expenses such as funeral expenses are also included in the benefit. There are also exclusions such as suicide, fraud, war, riot, and civil commotion.

Life contract falls into two categories; protection policy which is aimed at providing a benefit, typical lump-sum payment in an event of loss, while investment policies facilitate the growth of capital by regular or single premium, therefore, building cash value. General insurance is that of indemnity (putting you back in the position that you were before the loss) and it includes automobiles, fire accidents, third party coverage (Civil liability), and property insurance.

In addition, after WW1, there was a drastic increase in the production of motor vehicles, and as a result of the too many vehicles on the roads; the rate of accidents to increases so there was the need for insurance cover in the 1930s.

1.2 Statement of the Problem

It is important to know that the insurance business sector has greatly developed the country’s economy and has been a source of employment to the citizens of the country which has also increase not only the standard of living but also increase the countries revenue through tax paid to the government and a typical example is Cameroon.

Even though this insurance has played a great role not only to the development of the economy, motor vehicle owners have greatly benefited from it since, in case of a loss, they are indemnified due to the regular premium paid by the insured to the insurer.

Despite all these advantages, some Cameroonians still see the insurance industry as a modern scam. Cameroonians have a negative impression when it comes to insurance because of the altitude of some insurance companies and their agents because they do not have trained agents to deliver the product and even when it comes to claiming settlement. But this insurance is of great importance not only to the car owners but to third parties in case of the accident along the way.

1.3 Research Questions

In talking about the importance of motor insurance cover to car owners, it will cause the study to ask the following questions for better understanding:

1. How important it is for car owners to have an insurance policy cover?
2. What are the things that have cause car owners to see insurance to be very important to them?
3. How do you feel when your insurer indemnifies you when you have a loss?
4. Is insurance policy important in the very first place?
5. What is the thing that has caused insurance to be very special and important to car owners in Cameroon and Buea municipality in particular?