The primary purpose of insurance is to pay the sum insured or its equivalent to the insured who suffers financial loss due to the happening of the insured events within the period of insurance and in accordance with the contract stipulation. This payment on restoration, at least in part, can be provided through the mechanism of modern insurance and traditional social insurance.
The purpose of insurance can be described by a statement. As individuals, we are strong, but united we are a flood (the thought of Rev. Fr. Jean Betrand Aristotle the former president of Haite). The modern insurance may be organized as a private enterprise.
In other words, it could be in the form of commercial insurance business or social insurance/ security. The commercial insurance business emphasizes the contractual nature of the insurance and the profit-motive of the insurer.
The social insurance usually under the organization of the government provides for the insurance needs of defined persons for the defined social security benefits.
Traditional social insurance is never organized as a business venture. They are rather organized insurances to meet some social, political or economic needs for survival, self-reliance or development which as an individual they could not solve.
They are social insurances meant for
traditional societies having the background of subsistence agrarian economy and
communality, unlike the modern insurances providing for the urbanized and
industrialized community.
We have discussed the modern insurance in the previous
chapters. Therefore, this chapter is devoted to the examination of the
traditional social insurance with the background of Igbo land in Nigeria. It is
believed that generalization on the import of the traditional social insurance
can be made if the discussion presented in this chapter is understood. Indeed,
insurance is a way of life.
Meaning of traditional social insurance.
Traditional Social Insurance is better described than defined. It can be described as crude and unsophisticated forms of social and mutual insurance schemes formed by a group of persons who have common problems through the funds built up by individual member’s contributions.
To put it
differently, traditional social insurance refer to those ways and mechanisms
through which families, communities, and group attempt to provide or compensate
or fraternize with their members who suffer wants and misfortunes, other than
through the modern insurance schemes.
Traditional social insurance schemes have their not on the tradition of the society. The beliefs, customs and ideology of the society give credence to the practice of the various forms of the social insurance schemes which provides various benefits in line with the interest of the organizers and members.
The general motive of such schemes is survival expressed in the manner
of brotherhood and kinship. Unlike in the modern insurance schemes derives
their funds from the contributions of members, fines, levies, and donations including
those from members, government agencies, another association and well-wishers.
Features of the Traditional Social Insurance.
The general features of the traditional social insurance
schemes are examined in this section. It should be noted that each scheme
exhibits its unique attributes in relation to the interests of the members. The
general features include:
1.
Communality: The Traditional insurance social
scheme thrives in community. The strength and understanding arising from common
use or shared activities or interest provides the basis of the most traditional
social insurance schemes. This can be seen in general unwritten nature of the
rules and practice of the basic types of these schemes such as extended family
system, rotatory work group and Umuada.
2. Intimacy: Following the communal nature of the
traditional social insurance scheme, the members are usually close and
familiar. They understand one mother’s lifestyle, occupation, problems and
inabilities. The members are usually of common interest and often have the
opportunity to interact with one another unlike in the modern insurance scheme
where policyholders hardly know one another. The members could easily
appreciate their individual needs and may not need rigorous proof of loss and
claims adjustment as we have in the modern insurance.
3. Flexibility: The mode of operations of the
African Traditional Social Insurance schemes is usually flexible. There is
somewhat lose-end a nature of perils or misfortunes which would qualify
unfortunate members for benefits. Thus, the rigid rules and principles common
in modern insurance business are not strictly applied in traditional social
insurance.
4.
Economic and social protection: The dominant
motive of the traditional social insurance schemes is prerogative of providing
economic and social protection for the distressed or unfortunate members. In
addition to providing for the sick and unfortunate members, the scheme does
fraternize with members in social functions say marriages and in assistance
towards economic betterment.
5.
Mutuality: The members of the traditional social
insurance scheme possess identical or similar social character, ideology and
understanding. They have affection and respect for one another, and as such
share most things in common. Everyone is his brother’s keeper.
Form of Traditional Social Insurance Scheme.
There are many forms and categories of traditional social
insurance schemes. Of course, they are not limited and have scope for
multiplication according to the rationale that prompted their formation. The
commonest of them in Igbo are:
·
Extended Family System: The extended family
system is a family structure in which (in addition to the nucleus family) uncles,
aunts, cousins, nephews, nieces, in-laws and kinsmen are regarded as close
relatives, and everyone assumes and obligation to help and support one another.
·
Age-Grade Association: Age-grade associations
are often referred to as “out umuogbo” (association of age bracket). They are
often made up of either men or men and women of a given town whose birth
occurred within a certain period, usually within, 3-5 years interval.
·
Clan unions and town unions: Clan unions are
formed in different ways. There are varieties on which could be Umuada, Ndiche,
and others.
·
Traditional savings and credit associations:
The common name for the traditional savings and credit association is ‘Isusu’
or ‘Esusu’. It is associations of persons who have common interest with the aim
of contributing money periodically say every week, fortnight or monthly.
·
The professional associations: Professional
associations and Religious Group do offer social insurance functions in
addition to their fundamental common interest.