Just as has happened (and is still happening) to the Nigerian banking sector, the Nigerian insurance industry appears to be on the threshold of a momentous change. How it pans out is yet to be seen, but if you consider that Nigeria is grossly under-insured, the potential for growth would seem enormous. Market resistance to insurance is still very strong, granted, but it's not difficult to see that the right combination of customer-focused practices, well-crafted products, effective marketing and a few other well-targeted strategies can see the insurance market quickly expanding. Given the additional resources that have gone into the sector lately, the operators really have no choice but bring about positive change. There is better funding at their disposal and there is the imperative of generating reasonable returns to reward investors. All said, it is an industry that is challenged by circumstances to uplift itself.

That point of change is of strategic importance to us as investors. Major changes can redefine the prospects of a company or industry, with major implications for investment. That fact is clearly captured in the Investor's Business Daily's 'CANSLIM' model for finding great performing stocks. For 'N', which is about 'new', it says: "Explosive stock growth doesn't happen in a vacuum. Usually, new products, new services, new management or new industry conditions propel stocks to new heights." What it simply says is that when major changes are taking place, serious investors should watch and weigh. Of course, nothing counts for any gain if no action ensues. So, investment decisions should be taken when and where appropriate.

Changes as we expect for the Nigerian insurance sector call for such close appraisal. Here's why:

* The Nigerian insurance market is potentially huge, but is almost totally untapped.
* Packaging insurance products to appeal to potential customers is feasible and only needs creativity on the part of the operators.
* The insurance industry has just consolidated, shedding weaker players and reinforcing stronger ones.
* More capital inflow, as achieved through recapitalisation, has created a better environment to attract the human and technological resources that can bring transformation.
* Ownership change has, in some cases, brought in more focused institutional and other key investors that can drive improved performance.
* Most insurance stocks are still in the 'penny' range, meaning that the potential for substantial capital growth is relatively high.
* Insurance regulation is bound to follow the cue in banking and capital market areas and get more dynamic. Practices should improve, raising the profile of the business and improving market performance.

Taking Position
Picking the right clues early and timing stock investment decisions properly is at the root of stock investing success. There are transaction volume indicators today that show that some (discerning?) investors are strongly moving into insurance stocks, obviously taking position. The individual stocks are also picking significant price gains that prove their growing attraction in the eyes of the market. Whether you wait to be very sure of the direction of the industry or choose to take an early position will be your decision, though you must appreciate that some risk-taking is a healthy part of investment success. What can be said is that, unless an unexpected stultification occurs, that industry should have grown significantly a few years from now. It won't surprise us if some of today's N2/N3 insurance stocks have risen a few fold. That won't happen overnight, but given some time, a good investment will prove itself.

The Wheat from the Chaff
While industry growth is predicted, it can't be said that all insurance stocks will perform equally, over time. There will be leaders and laggards. Poor performers won't be ruled out. Sorting the wheat from the chaff is the crux of the challenge. This is the time to start digging for information on the approved insurance companies and in particular, the listed ones.

https://www.youtube.com/watch?v=JUHp3wbB1S4

[size=14pt]Africa's share in global insurance industry at 1.5%[/size]