Pooling contributions from hundreds of thousands of contributors, otherwise referred to as insureds, the insurance companies are thus provided with funds for which they could profitably invest. This, in very simple terms, is the relationship that should exist between the insurers and the insureds.

However, the perception in the Nigerian environment is different. The average man on the street hardly understands the workings of insurance. If there is any value to be derived from entrusting part of his earnings to an insurance company, he is blissfully unaware of such.

Comparative indices of insurance penetration tell the story even clearer. Whereas insurance in Namibia has, so far, achieved a penetration level of eight per cent and an even more impressive penetration of 15 per cent in the more economically advanced South Africa, in Nigeria, insurance penetration in still well below one per cent.

With a penetration rate of below one per cent, therefore, Nigeria portends a huge untapped market for the insurance industry, a massive opportunity for insurance companies of the like of Royal Exchange and others. The huge untapped market is fortuitous, especially in the context of the recent consolidation in the insurance industry.

Any casual observer of Nigeria's insurance industry would probably recall that sequel to the famous consolidation and recapitalization exercise that took place in Nigeria's banking industry the insurance industry quickly followed suit.

The results of the consolidation exercise in the insurance industry, even though different in scale and intensity, mirror almost exactly the results of the banking industry.

The Group Managing Director of the company, Mr. Allan Walmsley, said Royal Exchange Assurance has one of the largest branch networks in the sector, with 25 branches nationwide and 5 area offices.

For the year ended 31 December 2007, the Group recorded gross premium income (life and non-life) of N3.1bn, whilst shareholders funds were in excess of N15.5bn.

According to him, "Royal Exchange enjoys superb re-insurance arrangements both locally and internationally, and has in place the necessary treaty arrangements to fully exploit the significant opportunities that will arise in the oil and gas sector, following the Federal Government of Nigeria's 2007 local content directives".

The ownership structure of Royal Exchange Plc is approximately 45 per cent foreign owned and 55 per cent Nigerian owned.

Royal Exchange continually strives to ensure its relevance to the markets in which it operates and will continue to make strategic acquisitions to safeguard and increase that relevance.

Our recent efforts to upgrade our IT infrastructure, overhaul our product base, revamp our marketing and service delivery platforms and reinforce our commitment to our brand is further evidence of our desire to become a world class financial services provider.

Our commitment to integrity, stringent business principles and ethical trading is beyond question. Simply put, we will do all things necessary to be a winning brand and to deliver alpha returns to all our diverse stakeholders.

A very key step towards doing this would be for the industry to systematically deepen public awareness and understanding of insurance and to tactfully manage popular expectations of insurance companies.

It does not appear as if there has been much of a concerted and sustained effort to deepen public awareness and appreciation of the value of the insurance industry in the past.

If there has been such an effort, then it probably has not been as vibrant and sustained as it ought to have been, given the degree of palpable ignorance that still exists out there with regard to the benefits and essence of insurance.

For one of Nigeria's premier insurance companies, Royal Exchange, this should portend a huge challenge. As Nigeria's first insurance company, the company owes the industry an obligation of sorts to help the industry chart the best pathway that delivers value for the insured on one hand, and for the insurance industry on the other.

In other words, the company should be a trail blazer, setting a precedent for others to follow and, by virtue of the dynamism of its approach, creating a whole new paradigm regarding how the entire industry is appraised and appreciated by the larger society.

It does appear that the company is not unmindful of the expectations that are thrust upon its shoulders on account of its industry leadership, especially in the aftermath of the recent consolidation exercise.

A careful analysis of its game plan in recent times would reveal a deliberate, even painstaking strategy, to do things differently from how the insurance industry has, traditionally, done them in the past, with more verve and dynamism.

The first tactic in this wide ranging strategy, it would seem, has been the restructuring of the Royal Exchange organisation along the lines of a group structure. So the erstwhile Royal Exchange Assurance, as we used to know it, has been broken into four different units.

There is Royal Exchange General, which is apparently still the flagship, there is Royal Prudential Life Assurance, which will focus on the rather specialized life insurance sector. There is also Royal Exchange Finance Company and, interestingly, there is Royal Exchange Healthcare, a new offshoot led by a medical practitioner, which will focus on health insurance, among other specialized healthcare issues.

Each of the four major constituent units of Royal Exchange has a subsisting Managing Director, driving operations and all the Managing Directors, in turn, report to an overall Group Managing Director in the new Group structure.

Another tactic, it would appear, has been to adapt and deploy technology to its advantage. The company has had to overhaul its entire ICT infrastructure, replacing same with cutting edge installations that enable online, real-time transactions across the entire Royal Exchange Group network.

Indeed, one of the innovations that the company is set to unveil is the payment of insurance premiums by customers and potential customers via the use of scratch cards, thus eliminating the need to pay physical visits to the company's offices in order to make such payments.

The company is also strengthening its branch network. If it is one of the biggest in the industry and the country, it should, by extension, also be the most pervasive such that, as much as possible, it is accessible by customers and potential customers wherever they may be, especially in the key markets of Lagos, Port Harcourt, Abuja, Kano, Ibadan, Aba, Akure and others.

Plans are said to be already afoot to help ensure that the branch network is further fortified in line with this aspect of the strategy.

At the same time, the company has also fine-tuned an acquisition game plan which it is keeping close to its chest.

The company is overhauling not only its character but also its public image and perception via a massive rebranding exercise. The re-branding is all embracing. The company, it appears, is benchmarking itself with the very best companies in the world. In other words, it is not seeking to be a great Nigerian company or a fantastic African company.

Its sights are set on the global stage. It is striving to be a world class company. And, in this rebranding exercise, its focus is its people, its most valuable asset; its products and services and technology. The bottom-line is ensuring that, in the aftermath the company, is primed to deliver more than anyone else, premium value to customers, its people, its shareholders, the insurance industry as a whole and, of course, the larger society.

In priming itself to deliver unbeatable value, especially in the Nigerian environment, Royal Exchange will be living up to the expectation of a true industry leader.

It is blazing a trail that is sure to be traversed by many other insurance companies in the months to come and which will, ultimately, spell more growth for the insurance industry and deliver more value for patrons of the industry.

The other big challenge

that Royal Exchange must confront in this entire process is that of driving public awareness, education and consequently better public confidence in the insurance industry.

A sustained and consistent regime of informed public education and communication will systematically chip away at the misinformation and widespread cynicism with which the insurance industry is regarded in Nigeria.

The company can also take a cue from other parts of the world where industry groups have developed and executed, to dramatic effect, wide-ranging and very impactful campaigns to redress public misinformation or drive public education.

The famous "Got Milk?" advertising campaign which featured people, especially easily recognisable celebrities, wearing milk moustaches was one such campaign. It reportedly considerably shored up public appreciation of the dietary importance of milk and, consequently, willingness to ingest milk on a daily basis. Milk consumption shot up in the aftermath of the campaign in the United States.

The entire campaign was driven by an industry association for the collective good, not only of the association, but also of the larger society. Nigeria's insurance industry is crying for an intervention of this magnitude and its industry leaders can help to set this in motion.

Royal Exchange would also need to work closely with the industry regulatory body, the National Insurance Commission of Nigeria, NAICOM, so as to strengthen the body's regulatory prowess, enabling it to provide regulation that is proactive and robust enough to deliver long-term value for the industry and the country at large.

This becomes particularly imperative in the light of the growing convergence of the world into the famed global village. In this increasingly networked world, perceptive players are seeking opportunities far and wide and there is no doubt that there are global players out there who have long spotted the opportunities that abound in Nigeria's under-tapped insurance industry.

But opportunities notwithstanding, such global players will be best advised to step into the fray that Nigeria represents when there is clear evidence of regulatory certainty and professionalism.

It is, therefore, important for the industry leaders to be in the driver's seat of ensuring that, ultimately, the quality of insurance regulation that emerges is such as can be a proud showcase of effectiveness and professionalism.

With such confidence in the regulatory climate and against the backdrop of the growing consolidation of the insurance industry, it will not be long before Nigeria begins to witness the incursion of big global players, eager to be part of this virgin market, and a systematic inflow of capital into the bargain.

In operation in Nigeria since 1918, Royal Exchange was, for over twenty years, the only insurance company in Nigeria and can rightly be said to be forerunner of Nigeria's insurance industry.

That the company is today reinventing itself in order to be better positioned to deliver value to all stakeholders is good news. What remains to be seen is how this will translate into value for the extended insurance industry.