Ways of Computerizing the Human Insurance Information Management.

Ways of Computerizing the Human Insurance Information Management.

The existence and persistence growth of information technology in the world has immensely affected all dimensions of human life in which insurance is involved. Indeed the presence of information technology in the field of insurance has welcomed new directional expedition in its growth development and is able to meet up with comparative advantage to other types of business setups.
Insurance is a contract made by a company, society or by a State to provide a guarantee or compensation, for loss, damage, illness, death etc. Social device by which many share, the loss of a few, that is to say that an insurance company is a financial institution which involves many people to share the losses of unfortunate ones, Another definition is that insurance is a contract whereby a person called the insurer or assurer agrees in consideration of either a single or periodic payment called premium, to indemnify another person called the insured or assured against loss resulting to him/her on the happening or to pay him/her the claim on the happening of a specified event.

Insurance business in Nigeria has grown dramatically and undergone tremendous changes. As a result of the deregulation of financial services, including insurance, banking, securities, trading, .the roles, products, and services of their formerly distinct business have become blurred.
Insurance organizations compete in a highly competitive market. To drive revenue and profit, insurers need to better automate processes to optimize complex underwriting, highlight fraudulent and high-risk claims, perform accurate and consistent claims adjustment, and automate common customer service processes. In addition, changing market conditions, changing regulations, and the fluctuating economic climate all require constant modifications in the way business is done. Managing this change is a time-consuming, expensive and error prone exercise. IT departments are often not equipped to modify policies and procedures with the frequency the market now demands. A general skills shortage, restrictive maintenance windows, competing budget priorities, and business logic deeply embedded within complex legacy systems are also factors that slow time-to market.

Statement of the Problem
Policy which is a plan of action, statement of ideals, by a government, political parties, business etc, is an insurance company is a key determinant of the standing order of the company. The operational well being of the standing order as well as the well being of the insurance companies is mostly determined by its policies and how these policies are managed or implemented.
Nevertheless, data duplication, insecurity, inconsistency, constant misplacement of valuable documents, time wastage and dangers of misfiling are never the advantages of an insurance company. Thus this project seeks ways to overcome these deficiencies through the automation of the process.

Significance of the Study.
The significance of this work is that it moves operational processes closer to the front office and reducing unitary manual labor requirement of each business operation and come up with a quality management and successful automation of increasing number of work function in data processing. By automating decisions using business rules, processes are moved closer to the customer, resulting in improved consistency, accuracy and timeliness, as well as lower costs.

Aim and Objectives of the Project
The aim of this project is to seek ways of computerizing the human Insurance Information Management.

The objectives are:
To develop a database that will aid insurance company in easy storage and retrieval of data
To develop a new system that will reduce the labor cost of the existing system.
To develop a system that will Improve the current system of manual registration to meet up with recent information technology trend or evolution.
To develop a system that will enable efficient management of business rules and claims, to make way for accuracy in calculations and detailed explanation of the same.
Model an insurance policy information system that will modify the existing policy and procedure with the frequency the market now demands.

Scope of Study
The scope of this project covers the processes of Registration of Insurance policy to automate and model for Insurance to capture and understand key policies and rules as well as register online.

CHAPTER TWO
LITERATURE REVIEW
Overview of Insurance
According to (Vaughan, 1997) Insurance is the equitable transfer of the risk of a loss, from one entity to another in exchange for payment. It is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. An insurer, or insurance carrier, is a company selling the insurance; the insured, or policyholder, is the person or entity buying the insurance policy. The amount of money to be charged for a certain amount of insurance coverage is called the premium. Risk management, the practice of appraising and controlling risk, has evolved as a discrete field of study and practice.
Information technologies (IT) over the years have become an important too! Not only for business but also for governance and personal use. The ICT revolution has not only altered the way we work conduct business and recreate, but has also created new infrastructures for business, scientific “advancement and social interactions (Uneca, 2001). This revolution has fueled the proliferation of new media and the globalization of business and finance.
The evolution of computer from different generations to its present age, which is information age, has contributed immensely to the improvement of business operation in various aspects of which insurance companies are even accountable. It is one of the technological inventions of man. Which has acted in the reduction of manual work to create opportunity for automation which has enhanced the life of many and as well as transformed business operations.

Over the years in the time past, there have been many contributions by different writers to encourage the insurance policy, which result basically from registration, or application of it through constructed documents, known as proposal form. Based on this, (Nagee, 1979), Property as proposal of insurance 3rd Edition stated that the policy form comprises of declaration, issuing an agreement, exclusions and condition. For example the insurance agreement contains the obligation assumed by the company. Conditions contain the condition for limits of liability and for the procedure to be followed in the event of a claim, as well as declaration contained the Understanding data required by the insurance company (underwriting are basic information like name, address, labor cost and so on).
Buteny. E (1981) ”The Office Worker” put it that the insurance cover “Procedure begins-‘in I proposal and completion of a form” the insurer is usually a large company an underwriter, or the state. The basic of all is to replace the lost goods or properly, in [his premium is paid by the insured, he said that the condition to receiving claim is when the insured fulfill all the agreement made with the insurer that is stated in the policy form or proposal form.
In Esogwa, Osuala (1986) Business Method ordinary level slated “An Insurance agreement is a form of contract” By a process called underwriting, the insurance company enters into an agreement with a business to cover losses of specific types in return for a payment called premium. The insured business receives a pi inter document, known as an insurance policy that specifies the term of the insurance contract. He further mentioned components of insurance contract which are insurable interest and transfer of policy by given example against their existence in insurance contract, for insurable interest, he said that when a business is insured against loss to fire or other cause, the purpose of the insurance is considered to be the protection of the interest of the person who buys the insurance. The policy holder must have an insurance interest in the business. A person is considered to have insurable interest in any property, if there is a reasonable expectation that he will derive financial benefit from the existence of the properly or will suffer a loss from the damage or destruction of the property. Again in terms of transfer of policy that he later wishes to sell, lie cannot transfer insurance to the new owner without the permission of the insurance company. Also if there is any change in the title to the insured property, the protection under the policy usually becomes void. But the approval of the insurance company, the policy can be or transferred to the new owner. This transfer lie said is called an assignment.

According to Williams et al., (1995) Risk management and insurance Seenth Edition they defined Insurance Contact in three perspectives:
1. They saw it as the assurance of insurance coverage by an organization, raises the issue of whether the organization is in compliance with the laws and regulations governing insurance.
2. Secondly, the question that may arise in a civil action whereby one party alleges certain rights that flows from contracts.
3. The issues of bankruptcy proceedings since the bankruptcy act exclude Insurance Corporation from the operation of the act.

They stated the requirement of a valid contract, which includes:
1. Offer and acceptance: They said for a contract to be enforceable, evidence of agreement must exist, they said as well that a valid contract exists after one partly make; valid offer that is accepted by other party. Infect, they said what the law deems or an acceptance of the offer depends a great deal on circumstance and transaction. They said in typical insurance transactions, that the applicant. when they, he or she applies for insurance, they said that if the insurer reflects the offer but agrees to provide coverage subject to a surcharged rate or other modification the insurer offer is deemed to make a counter offer, which must be accepted b’ the applicant prior to its withdrawal for the agreement to become effective.
2. Consideration: They said (Consideration means that something of value must be changed by each party to the agreement. This they said that contract is not enforceable unless each party give up a right power, or privilege that he or she already has in exchange for an equivalent renouncement by the other; indeed they cemented that under insurance is the promise to you. They as well stated, “a Promise to pay can be deemed. Consideration even if actual payment does not occur where the consideration made by the insured is the payment of the premium or promise to pay”.
3. Legal Capacity: They said further that the parties to the contract must be legally capable of entering a contractual agreement. They condemned insane or intoxicated person’s involvements of contracts. “Again, they state that minors (persons between 18 and 21) may void a contract to which they are part as long as they do so prior to attaining the age of maturity. Therefore they lamented that insurers are presumed compliant if they meet _ statutory requirements to be licensed.
4. Purpose Not Contrary to Public Interest: They stated that a contract whose purpose is against the public interest would not be enforced. They stated that absence of an insurable interest for the insured (or, in life insurance, [he beneficiary) usually makes the insurance contract unenforceable.

Furthermore, they exposited on the different types of insurance contracts which includes the following;
a. Personal Contract: They said that all insurance contracts are persona! or an entity, not the property itself.
b. Unilateral Contract: In this type of contract only one party is favored, that is the courts will enforce the contract in one direction only, against one of the parties, either the insured/insurer.
c. Condition contract: the means that all insurance contracts are conditional contracts. Because not only the insurer can be forced to perform after the contract is effective, the insurer can still fail to perform, if the insured does not satisfy certain conditions contained in the contract.
d. Contract Adhesion: In this type of contract there is always adhesion to the laid down procedure outlined for the contract proposal.
e. Contract of the utmost good Faith: In this type of contract all the parties to the contract are bound to disclose all the facts relevant to the transaction.
f. Value and indemnity Contract: Involves contract that pays a stated amount if the insured event occurs. In this type of contract there is always an agreement between the insurer and the insured as to the value of damage if the insured event occurs. While contract of indemnity is the type that seeks to reimburse the insured for loss. In this type of contract the insured is fully restored to his or her condition prior to loss.

In Examination of Igwe, K.E. (1998) the fundamental of insurance “Stated that; the purpose of insurance is security, and in addition to this, it functions as:
• A means of savings.
• An investment by insurers.
• A means of removing fear and establishing confidence.
• He used automobile insurance as an example by specifying its kinds as;
1. Act Only Policy; this provides insurance’ cover sufficient only to comply with the provisions of the act. It is the chapter and therefore limited in scope.
2. Third Party policy; cover bodily injury death as well as the damage to the property of the third party.
3. Comprehensive policy; the widest so far, in addition to third party, it covers also personal accidents providing a death various benefits to serious injuries, .such as loss of limps, sum and etc.

He also said that once a proposal form is filled this is called an insurance contract or registration. This form he said helps to insure that;
1. All requests are made in Unison.
2. Used to agree on the nature of risk to be taken care of.
3. It makes for convenience and accuracy in handling offers to be insured.
4. It is also a means of advertisement.

After the form an insurance certificate is issued; it is this certificate that constitutes the input to the insurance work.
Among the scholars who contributed on insurance was, Opp and Group (1993), (IB study text, they explained that, insurance is a policy taken out to provide compensation in the event that something does happen, although the event is by no means certain to happen. This is made effective ‘by insurance brokers (a person who arranges the insurance). Thus, the role of the insurance broker is to obtain insurance on behalf of a client by researching the market and finding a policy that is most suited to the need of the client. The broker is the go between the client and the insurer; it is through this broker that the policy holder pays his regular premium and other requirement to the insurance company.
Adeeko et al., (2001), Examination focus commerce for Y ASSCE and SSCE, said that insurance is based on the principle of pooling risks.

They also outlined the basic principles of insurance, which included the following;
a. Pooling risk; it includes the contribution of large number of a people to a fund, out of which compensation can be paid to those experiencing a particular loss or damage.
b. Insurance Interest: This Guarantees that the person who takes out an insurance policy must have an interest in the subject matter of the insurance policy.
c. Utmost Good Faith (i.e. Uberima 1-ide); all parties to the contract must deal openly and honestly with each other and disclose all relevant facts.
d. Indemnity; Under this policy the policy holder is entitled to be placed in the same position after a loss, so that he makes no gain or loss.
e. Surbrogation: it refers to the right which person has to stand in the place of another and enjoy all the right and remedies of that other person,

Finally, insurance Basic Principles and Practice Ann Eche et al., (2005 | Describe the basis of insurance registration which is the proposal form as a document which drafted by the insurer and which seeks answers to the main material aspects of the risk, .further called it a questionnaire designed to elicit material information pertaining to the risk issued the emphasizes that the answers Lo the question helps the underwriter in the assessment of the risk, and it functions as an offer of contract made by the proposed. They said that this document (proposal form) is desirable for speed, convenience and accuracy in handling offers to be insured, and all requests are present in a uniform matter.
They enumerated the following;
a. Basis of the Contract: the proposal forms contain a declaration that the proposal is the basis of the contract and insured warrants the truth of the answers contained therein.
b. Advertising: All Proposal forms bear the name of the particular insurance company and may also contain details of the cover available under the company’s stand and policy for that type of insurance, even they also go as far as listing other types of policies they insurance companies underwrite. Convenient Elicitation of Information, information here means material facts. Proposal forms they said, makes it more convenient for them in assessment of the risk to know whether to accept or reject cover if they are receipting, on what terms and condition. They as well describe the structure of the proposal form to comprise of four sections.
a) Proposers Name: this is tor Identification and Communication purpose. The name can indicate the nature of the physical or moral hazard. This they say the name of the proposer indicate the nature of their trade or a particular name-may be that of someone with whom the insurance company docs not wish to do business because of doubtful integrity.
b) Proposer’s Address: this is required for Correspondence purpose. It is an important factor in underwriting motor insurance, theft insurance, and all risk insurance with different chances of loss.
c) Risk address: In certain cases, the address at which the risk is located may be different from the proposer’s home address and is material for reasons of proposer address.
d) Proposer’s Occupation: Some Occupation present abnormal hazards.
e) Insurance History: the Insurer will like to know whether the proposed risk has been -.dined by any insurer in the past and why or whether the previous insurers have Imposed special terms or premiums and why too before accepting 10 grunt cover.
f) Loss History: The section seeks information on the losses experience of the Proposer for some past years (3 or 5 years) in respect of the subject mater of insurance. The information presented will enable the underwriter to assess the moral and physical hazard surrounding the risk.

On-Line Processing
French (1996) computer defined on-line processing as a processing method in which case there is no manual intervention and the whole process is automatic. This on-line data entry he said normally takes place by means of data transmission equipment or as part of a distributed system. In this type of processing, by one means or another data arrives the main computer where the processing takes place.
Alexi and Mathews, (1999) “fundamentals of information technology” stated that on-line processing allows data to be processed instantaneously. They said that using an on line system, the request tor information will be instantly acknowledged by on-line software, and the appropriate step will be taken to access the central data and return the requested information to the terminal for which request was made. They emphasized, that on-line operating systems allows multi-user and multi tasking capabilities.
Onwere Don et al., (2004) “Computer science for information age”, saw on-line processing as a mode of processing in which data is collected and processed immediately. They said that the idea here is that data is transmitted from terminals to computer central processing unit through a modem for immediate processing. They as well highlighted the advantage as being fast, transmission of data is almost immediately and it supports interaction with user. They further listed some of its demerits, which indicate difficulty in corrections of error during transmission and expertise in operation, must be guaranteed.

Impact of ICT on the Nigerian Insurance Industry
The insurance industry is very important sector for any economy, as it provides coverage for businesses, investments and individuals through the sale of insurance policies, and collection of specified fees called premium. With many policies on the bouquet list of most insurance rtilS&S^jBd1 the ever rising number of customers and policy holders, it has become virtually impossible for most insurance companies to operate effectively and efficiently without the adoption and use of ICTs.

According to Falegan (1991), the Nigerian insurance industry has passed through there distinguishable phases. The Initial open door phase was roughly between 1900 and 1960. The transitional phase, which coincided with the first national development plan period, was between I 962 and 1969, and the take off phase started in 1990 and is still on till this day. Perhaps another phase is the recapitalization and consolidation phase of recent which has been characterized by stringent measures from government.
None-the-less most insurance companies in Nigeria have adopted the use of ICTs at varying degree, with little success for most. According to O’Brien (2002), there are many organizations may view and use information technology depending on their goals, objectives. Organizations may use ICT to strategize, they could as well be content lo use ICT, .support efficient everyday operation. The process of information technology adoption and use .critical to deriving the benefits of information technology (Karahanna et al., 1999).
The seamless storage, retrieval, sorting, filtering, distribution and sharing of information can lead 10 substantial gains in production, distribution, marketing and creation of new products and services. Businesses, large or small rely on quality information for just about everything they do. Mescon et al., 1999). Today computers play a central role in communications, especially with business and commercial activities. The Internet, electronic mail, videoconferencing are some of the capabilities of computer systems in recent times. Traditionally, information systems were designed to work in the immediate workplace environment. But recent developments in concepts and design of technologies have greatly considered the possibility of work outside offices and the work place, and have come up with a number of interesting discoveries and design. Thanks to nanotechnology, miniaturized devices such as laptops, palm tops and memory cards now come in bandy for business.
According to Steven A. (2002). without the technical progress, new ways of doing and managing work would not have been feasible.

Benefits of ICT
With respect to insurance business in Nigeria, quite a number of benefits have been derived from the adoption and use of ICTs over the years; two of the most prominent benefit includes faster means of communication and timeliness of operation. A technology such as video conferencing has made online real-time interaction with partners and associates located outside the headquarters a reality. Through their websites there is room for feedback and interaction with customers and potential policy holders. Vital documents, information and resources are now shared and exchanged seamlessly online. This mechanism makes it very easy to process claims and maintain policies.

Issues on the Adoption and use of ICTs.
About 79,4% of insurance executives and managers sampled in a survey carried out in Lab. Nigeria believes that huge investment on ICTs is justified, 3% said no and some 18% are yet to make up their minds, and hence categorized as being undecided. In the same vein, 64% said that the adoption and use of ICTs has led to an increase in revenue earnings for their companies, while 15% showed dissent by saying no, some 21% are undecided on the revenue issue. interestingly, most insurance companies do not see ICT as direct means to an end; rather they see ‘ it as a necessary tool for their operations.
Information elicited from a cross section of insurance IT managers revealed that five (14%) were part of the IT implementation process for their organization, and another five (14%) were convinced that the system in place is suitable for insurance business. Four (11%) IT managers said that they were not part of the implementation process, but have a good understanding of the system already in place. The type of network being managed also varies. Two (5.4%) said that they operate a distributed network, while another six (16%) said that they were on a client/server network. The client/server architectural models are basically 2-Tier and 3-Tier Architectural Model.

Two-tier client/server architectures have 2 essential components
1. A client PC and
2. A Database server.

Two-Tier considerations:
1. Client program accesses database directly.
a. Requires a code change to port to a different database.
b. Potential bottleneck for data requests.
c. High volume of traffic due to data shipping.
2. Client “program executes application logic.
a. Limited by processing capability of client workstation (memory, CPU)
b. Requires application code to client workstation.

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