EVALUATION OF IMPLEMENTATION OF INSURANCE IN BUILDING PROJECTS IN ONDO STATE, NIGERIA

Abstract

An insurance, is a protection against a possible eventuality, hitch spans through numerous sectors of different types and also a means through which the contractor can fulfill its financial responsibilities to the client. Since, construction industry is known to be a high risk industry; it is always obscure the extent of implementation of insurance in building projects. Thus, contractors encounter greater difficulties, when purchasing insurances coverage at appropriate levels, for all parties. Therefore, it is important to understand the real necessities of an insurance coverage, in minimizing the problems encountered that affects effective implementation and also to issue guidelines for effective implementation. This study evaluated the implementation of insurance in building projects in Ondo State, Nigeria. The study also examined potential challenges associated with the implementation, and proffered possible strategies to overcome the problems. In addition, the study proposed guidelines for effective implementation of insurance which addressed the challenges identified. The research was carried out using questionnaire survey, archival data and face- to- face interview. The study was of exploratory type covering two sectors mainly construction industry and insurance industry. The first set of population for the study consists of 20 building projects executed between 2012 2016 at the Federal University of Technology, Akure (FUTA) while the second part included construction stakeholders and insurance agents. Self-administered, structured and pre-tested questionnaire were used to collect data from 70 stakeholders involved in the identified building projects and some selected insurance companies in Akure, which included 15 contractors, 20 consultants, 20 client’s representatives and 15 insurance brokers. Within the qualitative research strategy, Semistructured interviews were conducted with 10 senior members among the respondents. Data collected was analyzed using percentile, mean item score, grounded theory and Kruskal Wallis tests. The analysis revealed that there was low implementation of insurance amongst contractors as a result of weak regulatory framework by the Clients. The findings also showed that the major challenges associated with the implementation were mistrust, complex policy language and late claim response. Furthermore, the study indicated that strict adherence to insurance law, reduction in premium; education and training were the main strategies that can be used to improve implementation. The study developed insurance guidelines as a way forward for the improvement of insurance implementation in Ondo State. The guidelines will assist construction stakeholders to purchase appropriate insurance policies and establish efficient insurance implementation strategies, with a view to reducing accidents, risks and uncertainties thereby ensuring mutually effective projects with clients.