One of the most important principles of the contract of insurance is the utmost good faith in which one of the parties to the contract, the insured, is expected to disclose every material facts at his disposal to the insurer at the commencement of the insurance contract in order not to void the contract abinitio. T h e f a i l u r e o n t h e p a r t o f t h e i n s u r e d n o t t o d i s c l o s e o r t o m a k e misrepresentation will automatically void the contract abinitio or to exclude the other party insurer from liability of any claim that may arise under such contract. This dissertation has attempted to look at the principle of good faith worldwide, by tracing the historical background of insurance, the theoretical development of insurance, emergence of insurance companies in Nigeria and by widely studying the general principle of insurance contract and the claim settlement experience of insurance in Nigeria whether there is fairness in the operation of the principle or not. When emphasis shall be laid on the law of utmost good faith, the principle of Caveat Emptor, overview of the principle of utmost good faith, the meaning of materials facts and the duration of the disclosure under the policy of insurance, the role of intermediaries as regard the law of utmost good faith and of course remedies for breach of utmost good faith. The dissertation concluded by looking at the utmost good faith and its impact on claims settlement in Nigeria as regard common law, statues and relevant cases in Nigeria and abroad; recommendation proffered on the inequality on the operation of utmost good faith and the general expectation from insurance as a whole.

CHAPTER ONE: INTRODUCTION

1.1       Background of the Study
Insurance is a form of risk management, primarily used to hedge against the risk of a contingent loss; in essence, insurance is simply the equitable transfer of a risk of a loss, from one entity to another, in exchange for a premium1. The history of insurance could be traced to early methods of transferring or distributing risk by Chinese traders as early as the 3rd millennia BC. These merchants travelling treacherous river rapids would cleverly distribute their wares across many vessels, whereby their losses are distributed in which the vessels that are saved from capsizing compensate for the ones that are capsized2. The modern profit insurance manifested in Babylon almost 2000 years B.C. in a contract of loan of trading capital to traveling merchants3. The contract contained a clause that the risk of loss due to robbery in transit was borne by the party providing the loan. In consideration for bearing the risk, the lender calculated interest on the loan at an exceptionally high rate.4
The Greeks and Romans introduced the origin of health and life insurance around 600AD, when they organized guilds/benevolent societies such as (collegian and military societies) which afforded members certain benefits, such as proper burial rites, or a financial contribution towards burial costs or traveling expenses or members of the army. In exchange for this benefit, members of the society made regular contribution to it.5
Similarly, in this period, the Iranian monarchs were the first to insure their people to some extent, formalizing the process by registration thereof at Court6. In accordance with translation, the beginning of the Iranian new year, the heads of different ethnic groups presented gifts to the monarch, the purpose of these gifts was to ensure (insure) that whenever the gift-giver was in trouble, the monarch, (and the Court) would help him. In return, whenever the giver was in trouble or needed finance, the Court would check the gifts registration, and could even-if the amount exceeded 10,000 Derik double that in return.7
All these instances gave effect to the concept of mutual assistance in case of loss, but the actual concept of mutual assistance came to the fore in the guilds and similar associations and societies which existed in Europe and England during the middle ages8.
These associations afforded members or their dependant assistance in case of loss caused by perish such as fire, shipwreck, theft, sickness or death. Separate insurance contracts (i.e. insurance policies not bundled with loans or other kinds of contracts) were invented in Genoa in the 14th century, as were insurance pools backed by pledges of landed estates9.
These new insurance contracts allowed insurance to be separated from investment, a separation of roles that first proved useful in marine insurance, insurance became far more sophisticated in post renaissance Europe, and specialized varieties developed.10
On 3rd December 1591, one hundred Hamburg house owners concluded the so called Hamburg fire contract which are generally regarded as some of the first examples of true mutual insurance contract that we have today.11
Toward the end of the 17th century, London?s growing importance as a centre for trade increased demand for marine insurance. In the late 1680s, Mr. Edward Lloyd opened a coffee house that became a popular haunt of ship owners, merchants and ship?s captains and thereby a reliable source of the latest shipping news. It became the meeting place for parties wishing to insure cargoes and ships, and those willing to underwrite such ventures. Today, Lloyds of London remains the lending market for marine and other specialist types of insurance, but it works rather differently than the more familiar kinds of insurance12.
Insurance as we know it today, traced to the great fire of London of 1666 that ravaged London from Tuesday, 2nd to Wednesday, 3rd September, 166613. The great fire cost London an estimated £10 million, at a time when its annual income was just £12,000, not surprisingly, thus expense focused minds on the idea of insuring against fire.14
The first insurance company in the United States underwrite fire insurance and was formed in Charles town (modern-day Charleston), South Carolina, in 1732. As other needs for insurance arose in the 1830s, the practice of classifying risk had begun15.Insurance had become accepted practice as farmers wanted crop insurance, travelers wanted travel insurance. Everybody turned to insurers to bring peace of mind.
Mechanically propelled vehicles were not used on the roads of the UK to any great extent before the beginning of the 20th century and, consequently, car insurance is of more recent origin than fire, theft and general liability insurance. The increase in road traffic after 1918 and the rise in the number of occasions when members of the public were injured, led to the introduction of the Road Traffic Act 1930. This Act imposed for the first time in the UK-A statutory obligation on the users of all cars to provide security against their legal liability for death of or bodily injury caused to third parties.16
In a nutshell, insurance has a vast array of lines of business as virtually anything can be insured ranging from life, health insurance, or even noses of actors, actresses and sport figures17.
The historical background of insurance practice in Nigeria can however be traced to colonization of the country by the British, which consequently led to the introduction of insurance business in the country.
The first insurance company (Royal Exchange Assurance) was established in 1928 and since that time more insurance companies have been established like National Insurance Company of Nigeria Limited (NICON) which was as at then solely owned by the Federal Government.
As at the First Quarter, of the  year 2015, the  Number of licensed  Insurance Practitioners in Nigeria are as stated below:

Reinsurance	-	2
Underwriters	-	58
Brokers	-	577
Loss Adjusters-		54
Agents	-	1900

Out of the above figures, 15 are licensed to underwrite Life Business, 29 Non Life Business, 12 are licensed on composite while only 12 are licensed to carry out the Business of Reinsurance.
Insurance contribution to the Nigerian Economy is N302,000,000 BN constitutes only about 10.55% to TGP18
Insurance however, operates on some basic principle, an example of which is the principle of utmost good faith Uberimae Fidae which requires all the parties to the contract to disclose every materials facts relating to the contract. Failure to disclose these facts relating to the subject matter of insurance may make the contract to be voidabinitio. The onus lies more on the insured than insurer which is expected to disclose all the facts relating to what supposed to be covered under the insurance contract19.
The Nigerian insurance industry is therefore using this opportunity to wriggle out from paying genuine claims when they arise. The image of insurance industry in Nigeria in terms of prompt settlement of claims has not been encouraging as compared with their counterpart abroad20. This no doubt has led to skepticism on the part of insuring public in taking some of the insurance products despite the rigorous awareness programmes embarked upon by the industry of recent. An insurance company which refuses to pay a genuine claim based on the fact that the insuring customer failed to provide an information which is not at the knowledge of the customer at the time of the contract which now forms the subject matter of the claim by relying on the principle of utmost good faith is unacceptable. It is the effects of this lacuna that this thesis seeks to examine.

1.2       Statement of the Problem
Firstly, the policy holders of Insurance Business have been seriously complaining and not satisfied in terms of provisions of service by Insurance Industry especially as regard their claims settlement – The complaints always centre on non settlement of their genuine claims by using flimsy exercise in order to wriggle out form settlement of claims.
It was stated by most policy holders that most Insurance companies rely on the prior information submitted at the commencement of the contract as the basis of repudiating their claims settlement and to decide whether the practice of insurance as regards utmost good faith as being practiced worldwide is what is also obtainable in Nigeria, the effect on Nigeria populace and the impact on prompt settlement of insurance claims in the Nigeria industry.
Secondly, our legislators have to be up and doing in the promulgation of Insurance Law that will no doubt protect the interest of the citizen especially the holders of Insurance Policy. The legislation introduced before could not take care of the imbalance in operation of utmost good faith.
This Research work shall attempt to find answer to the following questions:

1. In the practice of Insurance Business in Nigeria is the Average policy holders satisfied in terms of provision of service by Insurance Company?
2. Is sit true that an Insurance Company is ready to accept premium of the Commencement of the Contract but are reluctant to pay genuine claim to their policy holders when a claim arises?
3. Is the regulation of Insurance Industry and legislation regulating Insurance practice adequate enough in Nigeria?

Lastly, the contribution of Insurance Industry to our Gross Domestic Product (GDP) in Nigeria is too low as compared with the other financial sub-sector contribution to the GDP, there is therefore a need to encourage policy holders and to educate the citizen about the importance of Insurance Business in order to boost the Income from this sub-sector.
Is contribution of Insurance sector to total Gross Domestic Products (GDP) adequate enough to necessitate the needed reform in Insurance Industry?

1.3       Aim And Objectives Of The Research
The main aim of this work is to find solution and proffer recommendations to the problem of the research.
This aim shall be achieved with the following specific objectives:

1. To critically look at how the insurance is being practiced in Nigeria vis-à-vis what is obtainable in the other parts of the world. We focus on whether the contract has been fair or otherwise to the insuring public and of course we analyse defects or shortcomings where necessary.
2. To place emphasis on the principle of utmost good faith and its impact on the prompt settlement of insurance claims. The question whether insurance companies are ready to collect premium but not ready to settle genuine insurance claims under the pretext that the insured has violated the principle of utmost good faith shall be adequately addressed.
3. The Research work shall examine the legislation operating as at now and to know what are the legislation introduced by the Government in order to curb the menace of most Insurance Companies so as to protect the policy holders and the consuming public.
4. The Research work shall examine what are the challenges for ture development of Insurance Business in Nigeria in order to improve their image for the purpose of meeting the challenges of the world globalization and to boost the country?s economy.
5. To examine further challenges as the world is becoming a global village, as a result, the future challenges of insurance business in Nigeria shall be critically analysed with a view to improving the image of insurance contract in the country.

The research shall, therefore, advice where more regulations, legislation, and protections by the government are necessary or required.

1.4             Justification of The Research
Insurance plays a tremendous role towards the industrial development of a nation; it cushions the effects of a loss and acts to assist an entrepreneur to take a decision towards establishing an industry without fear of a loss. As a result of this, investors are not reluctant to access loans in the bank once they know that insurance shall protect them against an unforeseen circumstances thereby boost the economic development of a country like us. This will no doubt leads to employment of our youths, increase economic activities and in the long run shall contribute to the Gross Domestic Products (GDP) of the country.
Similarly, the purpose of Law in any society is to regulate the condition of human activities whereby it ensures that things are done properly. This work, therefore, will assist the Insurance Company about the best way of practice in order to enhance their productivity and to enable them be alert as to the responsibility of their customers requirements. The policy holders will also be as to their rights and duties under the contract of insurance in order not to jeopardize their interest when a claim arises.
The research work has potential to improve law relating to insurance, performance implementation and it will add to body of knowledge on their subject matter or it may generate further research and thereby shall be useful to law students, scholars, lecturers of law, legal practitioners, members of the bench, the investing public, the general reading public interested in insurance matters and of course the policy holders o insurance policy.

1.5       Scope Of The Research
The scope of this research is determined by the statement of the problem and the aim and objectives of the work. As such, issues such as those raised in section 1.3 and section 1.4 as stated above shall constitute the area of interest of this work.
The scope of the work is limited to Nigeria jurisdiction. The research, however, look into other advanced jurisdiction like USA and UK where necessary to buttress our points and for comparison analysis only.

1.6             Research Methodology
The research method used in this work is doctrinal. Doctrinal means, theorizing without considering the practical consequences, it is called a visualized research, imaginative research, unpractical research, a visionary research, or a conceptual research.21
Primary sources of information include the Constitution of the Federal Republic of Nigeria, 199 (as amended) the received English Law, different legislative enactments in Nigeria including Companies and Allied Matter Act, (CAMA), Investments and Securities Act, (ISA), Insurance Laws and Acts.22
Decisions of superior Courts of records shall be relied upon, other primary authorities to rely upon include decision of the Code of Conducts Bureau, failed Banks Tribunal, Economic Finance and Corrupts Commission, (EFCC), etcetera.
Secondly, sources of information of this work shall include commentaries by legal scholars, text books, precedents, journals and periodicals written by legal authors etc.

1.7       Literature Review
Most contract are governed by the maxim caveat emptor or let the buyer beware, unlike other contracts in legal arena, the law of Insurance revolves around the duty of utmost good faith as nucleus element in Insurance contracts. Notwithstanding the fact that Insurance casts the duty upon both the parties – Insured and insurer, to an Insurance contract, the former finds himself in a more harsh and difficult condition when a dispute arises.
This Literature Review is directed to view the relevant writings on the subject with a view to presenting a comparatively study of the legal stand of the Insured and the Insurer so far as their duty as regard utmost good faith.
Herbert Smith23 opines that one of the reasons for this principle of utmost good faith is the natural imbalance between the insurer in terms of knowledge. Take for example life policy, before the pre-contractual process of disclosure is commenced, the proposer for insurance is in a position to know all about his state of Health, previous ailments, family history and his habits such as smoking and exercise, if that person is not obliged to make full disclosure, Insurance could not work from either insurer?s or the insured point of view. It is to redress this possible fatal imbalance that the duty of good faith has subsisted. under it, the insured is obliged to disclose to the insurer before the contract is made all matters that are material to the decision the insurer takes as to whether to offer to insure at all and, if so, on what terms24.
The pertinent question to ask is that if an Insured does not know that he has an ailment like cancer for example, can he be asked to disclose what he does not know. This is one of the lacuna that this dissertation will like to address.
In the work of Allens on the subject matter, the duty of good faith requires insurers to act with due regard to the insured?s interests in situations where there is a conflict of interest. The duty also requires the insured to act honestly when dealing with the insurer25
In most cases however in Nigeria context, the principle works in favour of insurers and they always work to protect their interest at the detriment of the insured which this dissertation is trying to iron out.
Malcolm Clarkes in his research26 points out the difficulty situations an assured faces due to the resonant expression of the duty to disclose with reference to the judgment of a „prudent insurer? a brain child of Commercial Merchandiser. The proposer might be skeptic thinking about the questionnaires of the proposal form whether he or she needs to say more as all the things may not be covered in the proposal form. Again the proposer is required to think in a way an insurer in the market does, which is understandably quite difficult for average level policy holders. Moreover, every information will be considered material if it would influence the Judgement of the prudent insurer at the time of contract or of renewal as to whether to take the risk at all or/and to fix a higher amount of premium.27
This assertion no doubt puts a heavy duty on the policy holder to unveil every fact which a prudent insurer would considers material; otherwise the insurer can refute the policy to be paid, no matter the assured be however innocent or reasonable in making the decision regarding whether or not a particular fact is material.
However, Shi Feng argues that the principle of utmost good faith has always been the crown of the field of marine insurance law, which derived from the case of Carter v.Boelm28. With the codification of the Marine Insurance Act 1906, the principle fromexpression in section 17 to 20,section 17 presents the general duty to observe the utmost good faith, with the following sections introducing particular aspects of the doctrine, namely, the duty of the Assured (s.18) and the broker (S.19) to disclose material circumstances, and to avoid making misrepresentation (S. 20)29
Woloniecki wrote about the duration of utmost good faith, as based in the decision in the case of Carter v. Boelm (Supra) concerned the pre-contractual duty of disclosure. Lord Mansfield did not consider the duties of the parties to one another after the contract has been made. Most of the 19th century cases concern breaches of the duty of good faith by reason of non-disclosure or misrepresentation at the time of the making of the contract, it was understood to be the law, however, that there was no obligation on assured to disclose to the underwriter facts material to the risk that came to the Assureds? knowledge after the contract was made30.
It is, however,important to note that in the practice of insurance in Nigeria, the duty has no limit, the insurers use it at will in order to favour them and to wriggle out from liability and this is what this thesis is ready to address.
Prithvi wrote that utmost good faith requires that each party must be given a reasonable opportunity to make independent enquiries about the subject matter in question so that they may take a decision, thus, all material facts must be disclosed or made available, to the party so that he or she may reasonably enquire about the same. This further puts a duty on the party making the subject matter accessible to the person enquiring, not to play fraud or misrepresent the same, else it would be hit by section 19 of the Indian Act. Section 19 also clarifies that misrepresentation or even silence amounting to fraud will not entitle a party to avoid the contract if he had the means of discovering the truth with ordinary diligence and did not do so. Hence, there must thus be free consent and the parties must understand the same things in the same sense. The Insurer faces a lot of problems trying to verify all such details, even though the advent of Technology has made the task comparatively easier nowadays31.
However there is still no clear cut distinction between what is material or immaterial, and this lack of distinction is largely dependent on the interest of the insurers, and the terms of the contract at the detriment of the insured.
Rupert Cohen argues in his paper “Utmost Good Faith in Insurance Law: A Redundant Concept” He stated that the duty of good faith should be removed from all transactions in Insurance Law that firstly, there seems little doubt that there is a compelling argument for reform of the duty to disclose.Secondly, the argument for retaining the overall duty of good faith in such a reform seems considerably weaker than those against. Thirdly, only in business transactions in which standard forms are not the means by which the policy drawn up does the duty retain an operative function32. The personal opinion of the researcher is not to remove the doctrine but to modify it in such a way that will remove an imbalance between the insured and the insurer so that its operation will not be done as to Jeopardize the interest of the insuring public.
Stuart Cotton states in his paper33 about the relationship as regard utmost good faith that exists between the Reinsured and the Reinsurer as an honourable engagement and long term relationship based on trust and confidence were the norm. The cedant took care in the underwriting of its business, provided material information to the reinsurers, and took the interests of its reinsurers into consideration when settling claims, for its part, the Reinsurer did no contest the cedant?s claim practice, and paid the claims upon demand.
This relationship existing between the Reinsurer and Reinsured does not exist when it comes to insured and Insurer in which there is an Imbalance and the Need to correct the imbalance is very germane to this thesis.
Christopher Butcher Q. C. advanced in his paper on Utmost Good Faith that as at present, there is occurring the latest in a series of Episodes in which serious consideration is being given to the reform of insurance law in the UK as well as in other countries, like Scottish law commission are looking at the matter and the possibility of reform in which they are concentrating their mind on whether present rules are justified. In the present area, it is suggested by him that there needs to be a long and careful look at getting rid of the doctrine of good or of the utmost good faith. To talk of insurance contract as being contracts of good faith tends to be either useless or positively harmful to a coherent development of the law. If there were to be reforming legislation, the whole concept could be dispensed with. That is to say, of course, that some of the present incidents of insurance contracts, which are said to be Justified by the doctrine of good faith, such as an obligation to make disclosure pre-contract, do not need to be retained. In some form, they clearly do. There is much legitimate and necessary debate as to exactly what that obligation should be and what should be the remedies for failure to perform it34.
It is the opinion of this research work that the doctrine needs not to be entirely jettisoned as advised by the writer above, but to be codified for an equal Right of all the parties to the contract of Insurance to be maintained.
Smith T. S. points out that at present there is an onerous duty of disclosure on the part of the policy holder. It is recommended that a full and frank disclosure is made to insurers to avoid repudiation at a later stage. The complex Task of reforming the law on insurance is on going. That is certain to be an extended process in light of the significance and likely impact of any reforms as well as the number and size of stakeholders affected. Insurers are under the same duty as the insured in terms of good faith. However, it remains to be seen how far that concept will be developed by the courts and the law commissioner35.
This research work also expects an improvement in Nigeria as regards the modification of the law in this area.
In Chris Parsons et al Company & Contract Law and their application to insurance.36 The duty of utmost good faith is viewed as “a positive duty to voluntarily disclose, accurately and fully, all facts material to the risk being proposed, whether asked for them or not”
The problem with this definition is how does an insured knows what is material or what an insurer is expected, the insurers should have asked all the materials they feel it is material and not to leave the insured at their mercy. This lacuna shall be filled in this thesis.
Oniwinde A. K. in his paper Marketing of Insurance Services in our Society37 discussed utmost good faith “as a person who proposes his life or property for insurance is expected to disclose all material facts pertaining to the risk object to be insured which may influence the mind of the underwriter or insurer as to whether or not to accept the risk for insurance”
It is expected that the duty should be reciprocal whereby the insurer is also expected to disclose to the insured all relevant information pertaining to the insurance services that may need to be offered.
In Ojo P. F. Effects of SAP on property insurance38 “the principle of utmost good faith is viewed as a doctrine that stems from the assumption that the insurer knows nothing about the risk proposed but the insured knows everything so that it is only logical for the insured to disclose all material facets which is said to be any fact which will influence the judgement of a prudent underwriter in assessing a risk and deciding whether he will accept the risk or not and at what rate of premium”
It is should be noted however that there are certain facts which tend to lessen the risk which is not in the contemplation of the author, for example, facts of public notoriety. One is also expected the insurer not to accept an insurance which they know is not enforceable at Law or to issue a policy in ambiguous terms. This needs so to be considered vis-à-vis the duty expected of the insured in order to remove the imbalance as expressed by the Authors.
Agomo C. K. in duty of disclosure and test for materiality in insurance Law: A tale of two developments39 discussed the principle of utmost good faith as the one “which is manifested in the sub-rules of non-disclosure, misrepresentation and perhaps, warranties, states that the parties to a contract of insurance owe one another the duty to disclose all facts which are material to the risk proposed. It imposes on the parties a higher standard of probity than is required in ordinary commercial contract; it also separates a contract of insurance from a wager40
Looking at the above definition, the duty is borne by both the insurer and the insured, but in practice it is borne exclusively by the insured and is, therefore, a very potent weapon in the hands of insurers since it gives them the right to avoid the whole contract and not just the particular liability and thereby avoid to pay claim.
It is therefore not surprising that the practice application of this doctrine may provide a fertile ground for litigation across the length and breadth of insurance Law as this lacuna is too open and needs to be filled by this thesis.
The legislatures reviewed both in UK and Nigeria calling for the reform of the duty of disclosure namely (1) the English Law Commission in 1980, the national consumer council in 1997 and Nigeria Insurance Act of 2004. All attempted to initiate sweeping reforms across the area of interest, however, despite the manifold calls there has been no dramatic change as one party the insurance company still determines what is materials facts to a contract of insurance at the detriment of other party (the insured). In doing this, it fell short of the scope of this thesis. Its area of concentration is but an aspect of this thesis, and as such differs from it in scope, as the emphasis of those legislations were purely market oriented and not holistically focused on the general welfare of all the parties concerned.

1.8       Organizational Layout
Chapter one is the general introduction dealing with historical background, literature review, problems of the research, scope, research methodology, justification and organizational layout.
Chapter two deals with the Nature and Scope of the General Principles of Insurance Contract theoretical development of insurance contract Nature of Insurance and Contract of Insurance, Nature of Insurance of a contract of uberrime fidei, origin of utmost good faith, justification and its meanings, general principle of insurance contract and of course the claims settlement experience of insurance industry in Nigeria.
Chapter three dwells on the principle of Caveat Emptor, the general overview of the principle of utmost good faith , the meaning of materials fact, meaning and duration of the duty of disclosure, the role of intermediaries as regard of the law of utmost good faith and the remedies for breach of utmost good faith.
Chapter four examines Issues, challenges and prospects in the enforcement of the Law of utmost good faith on utmost good faith under common Law, utmost good faith under statutes, an overview of relevant cases in Nigeria and abroad and the impact of utmost good faith to settlement of claims in Nigerian.
Chapter five is the concluding chapter summarizing the work making findings and recommendations.