Insurance can loosely be said to be the facility by which those unfortunate enough to be the victim of some loss can gain compensation.
It is the function of insurance in its numerous forms to enable individuals to safeguard themselves against such misfortunes by having the losses of the unfortunate few paid through the contributions of the many who are exposed to the same risk.
Insurance is one of the society's oldest and important institutions for mitigating the loss potential of a risk. Before the advent of modern insurance in Nigeria there existed what may be described as crude or unsophisticated (traditional) forms of mutual and social insurance schemes. In addition to the extended family system, this was in itself a form of social insurance scheme, there were Isusu, social club, Umuada (umuokpu), Age-grade associations and other clan or traditional unions that acted as mutual insurance societies. The Age-grade associations were made up of men or women of the same age bracket who came together and maintained funds built up from individual members. Those contributions could be in the dues, levies and so on, and were collected on periodic basis. From the funds accumulated periodic expense for deceased members were met like the maintenance of the deceased member's immediate dependents until they are able to carter for themselves.
The isusu arrangement comprises a group of people who agreed to come together with the idea of each contributing into a common fund, a fixed amount on pre-determined basis (monthly, weekly as the case may be). The accumulated fund at a particular period of time is given to one member to enable him/her meet up some of his/her financial obligations and needs. This is usually on rotational basis.