Contents

1. Overview of the company............................................................................................................1

2. Organizational Structure..............................................................................................................2
2.1. Descriptions......................................................................................................................2
3. Service offered by the company...............................................................................................4
4. Requirements for the service offered.......................................................................................5
5. Insurance coverage of the company.........................................................................................7
6. Challenges of the insurance industry in Ethiopia.....................................................................7
7. Possible recommendations and suggestions.............................................................................9

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 1. Overview of the company
The Ethiopian Insurance Corporation (EIC), a government financial institution, was first
established January 1, 1976 by Proclamation No. 68/1975. The company was created by
Acquisition of all the assets and liabilities of thirteen nationalized private insurance companies
paid-up capital of Birr 11 million. The company was then restored in accordance with this
Proclamation No. 25/1992 on Public Enterprises with capital of Birr 61 million.

The objects of the company, as stated in the proclamation, are: To participate in the activities of
Provision of insurance services and performance of any other related activities relating thereto
achievement of its purposes. EIC has been offering insurance since its creation Services for its
clients as sole provider of insurance services for 19 years (1976-1994) and as one of the
insurance companies operating in the market since 1994. After Liberalization of the financial
sector.

in 1994, the Ethiopian insurance market was opened to local investors and as a result private
insurance companies began to flourish in the country. EIC currently employs 1,604 people with
102 direct sales offices and 705 active sales people, and work with various reputable local and
international reinsurers, brokers and banks. IEC offers life, property and liability insurance
policies and also participates in various investments Areas in line with National Bank of Ethiopia
Investment Policy. Known for his strength and Reliable solvency, long-standing affiliation with
several international insurance companies’ organizations and associations, EIC has maintained a
comprehensive offer to the outside reinsurance contract and assumption of reinsurance business
(including co-insurance). wide range of risks.

EIC provides long-term (life) and general (property and liability) insurance coverage for various
Types of customers that include governments, individuals, and public and private organizations.
The EIC is also implementing a comprehensive reform and governance program that
the financial sector reform agenda and socio-economic development and transformation
program that the nation has undertaken. EIC has implemented several reform tools (Quick
Wins, BPR, BSC) since 2011 has focused on creating an efficient, effective, ethical and
performance-oriented environment-oriented insurance company.

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Ethiopian Insurance Corporation has been the market leader in the Ethiopian insurance industry
since market was opened to local insurance companies in 1994 important role in directly or
indirectly influencing the sector in various sectors, such as the product development, transfer of
knowledge and skills, expansion of branches, establishment of premises reinsurance company
(Ethio - re) etc. The company can also development, not only in job creation and insurance
coverage for the public in general, but also contributes to a greater extent to the discharge of a
significant part of the state dividend to the government resulting from its steady earnings
performance.

2. Organizational Structure
Figure 2.1 1 Organizational Structure of Ethiopian Insurance Corporation

Source: eic-et.com
2.1. Descriptions
 Board of Management

The Management Board is mindful for overseeing the company, setting goals and deciding
technique. In doing so, the board embraces to protect the interface of the company and to look
for a feasible and long-term increment within the esteem of the company.

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  Chief Executive Officer
Playing a significant part, the CEO is anticipated to characterize Company commerce technique
and coordinate trade arrange usage by driving all work pioneers within the company to guarantee
the accomplishment of company’s objective and vision. The anticipated conclusion result is
accomplishment of company trade destinations and vision.

Detailing to the Board of Executives, the Chief Official Officer (CEO) will bring energy,
motivation, and an entrepreneurial vision to EIC to drive its progressing affect within the
workforce improvement and climate value spaces. The CEO is committed to shared and
quantifiable objectives nearby a solid authority group but will have by and large vital and
operational duty for Rising Sun’s staff, programs, key vision, finances, gathering pledges,
outside connections, development, and execution of its mission.

 Directorate. Internal Audit

The Directorate, Internal Audit is the Centre’s Chief Audit Executive (CAE) responsible to the
President for chance administration and admonitory administrations and to the Chair of the Fund
and Review Committee (FAC) of the Board for the Finance and Audit Committee. The
officeholder is dependable for building up, driving and coordinating an Inside Review work to
upgrade and ensure organizational esteem by giving partners with risk-based, objective and
dependable confirmation, counsel and knowledge. Typically accomplished by bringing a precise,
restrained approach to assess and progress the viability of IDRC’s hazard administration, control,
and administration forms.

 Directorate. Legal Service

The directorate. Legal Service gives legitimate counsel and related administrations to the
commissioner and the seven divisions of the Protections Office on a wide range of issues that
emerge in controlling the protections industry and in giving administrations to the customer. In
doing so, the legitimate staff of this office drafts, screens and analyzes enactment; drafts and
promulgates controls; and takes part in division hearings including rates, permit authorization,
and acquisitions of residential protections companies.

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The directorate gives oversight of the protection’s receivership and guaranty reserves action of
the division and in doing so, keeps the staff of the Customer Issues Unit, and other Division staff,
educated on advancements so they may appropriately benefit the request and complaints of
buyers.

 Directorate. Information Technology Service

Create, introduce and make prepared the data organize framework, sub-systems and servers;
regulate and control their appropriate working and give troubleshoot issues on the arrange
framework. Give preparing on computer program applications for the company staff, screen the
clients of the arrange framework, take reinforcements routinely as per the company’s approach
and secure the framework from infection assaults

 DEPUTY CEOs

The part of Deputy Chief Executive Officers was made particularly to assist lead and secure the
organization’s operational conveyance and assist the CEO within the developing and driving the
technique of EIC.

3. Service offered by the company

Ethiopian Insurance Corporations product and services fall into broad categories i.e. Long-Term
Insurance and General Insurance.

Long-Term Insurance

The Ethiopian Insurance Corporations renders more than 15 sorts of polices within the life
Protections Segment. Life protections approaches can be bought independently and in-group,
which enable the guarantor to induce different benefits. The advantage picked up from these
protections arrangements depends on the choice of the clients.

The distinctive sorts of life insurance policies the enterprise gives are:
Endowment (Ordinary endowment, Anticipated Endowment Policy with profit, children
%u2019s Education policy with profit, Annuity etc.)

Term (Individual Term life Assurance, Group and Modified Large groups Term Life Assurance,
Individual and Group Mortgage Protection Assurance etc)

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Whole Life Assurance.

Medical Assurance (Individual medical Assurance, Group Medical Assurance, Executive

Medical Assurance & Travel Health Assurance) are among the major ones. The corporation
moreover plans and gives arrangements, which go alongside the social and financial standard of
the society. In this angle, the pre-funeral cost protections can be cited as a great illustration.
moreover, plans and gives arrangements, which go alongside the social and financial standard of
the society. In this angle, the pre-funeral cost protections can be cited as a great illustration.

General Insurance
The Ethiopian Insurance Corporation gives more than 30 sorts of non-life Protections
arrangements. Non-life protections arrangements are utilized to cover property and risk dangers.
The Enterprise reexamines its arrangements frequently and produces modern approaches based
on the country’s current financial advancement and the request of clients.

For example, currently it has prepared new insurance policies like Floriculture, Condominium,
Tea and coffee, Weather Indexed Crop Insurance, Warehouse Operators Liability Insurance. The
major property and liability insurance services given by the Corporation are all risks, Aviation
(Cargo and Hull), Bankers Blanket Policy, Burglary and House Breaking, Bonds, Condominium,
Consequential loss, Crop Insurance, Engineering, Fidelity Guarantee, Fire and Lightning, Goods
in transit, Inland Carriers liability, livestock, Marine (Cargo and Hull); money, motor,
personal/Group Personal accident, Plate glass, Product Liability, Professional Indemnity, Public
Liability, Workmen’s Compensation and the like.

4. Requirements for the service offered

The requirements analyzed in this paper consider general insurance contract.
1) Assumption and Transfer of risk

The essential component that's essential to a contract of insurance is an assumption of a chance

or misfortune and an undertaking to repay the insured against such misfortune. The assumption
and transfer of risk in EIC depend on whether all risks are insured or not.

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According to article 663(1), it is a duty of the insurer to guarantee the insured person against all
the risks specified in the policy. The risks must obviously occur as a result of unforeseen events
or negligence of the beneficiary (insured).

The corporation outlines certain cases where the corporation doesn’t due to severity of the risk.
These risks that are prohibited by statutory arrangements such as articles 663(3) which deals with
risks emerging out of the intentional default of the beneficiary, 676(1) which concerns
misfortunes due to universal or civil war, 699 which talks approximately suicide,5 and 700
which bargains with the purposefulness murdering of the insured. Certain risks can be prohibited
by particular terms of the insurance policy of the corporation to which the guarantor individual
must adhere

2) Premium

The reason of a contract of insurance is to orchestrate the sharing, among a huge number of
people, of the fetched of misfortunes which are likely to happen as it were to a few of them or to
happen at a prior time to a few than to others. Installment of premiums is, hence, one of the
obligations of the guarantor who is secured by the insurances of the corporation. The insured
attempts to pay a whole of cash that is specified and concurred upon, in return for an advantage
from the safety net providers. This obligation is revered in articles 654(1) and 666(1). These are
a few of the general arrangements that are applicable to the insurance of objects, persons and
liability for damages by the corporation.

3) Insurable interest

It is a basic requirement of a contract of insurance of eth corporation that the insured ought to
have an insurable intrigued over the subject matter of the insurance. Different inks had been spilt
in a try to come up with a palatable and elite definition of an insurable intrigued, in spite of the
fact that to no profit. And, in spite of the fact that there's no generally acknowledged definition,
insurable intrigued can be clarified by dichotomizing it. It can be seen that the concept is
constituted of the words "insurable" and "interest". From a lawyer's point of see, the term
"insurable" alludes to something that falls inside the domain of protections scope. Risks related
with the subject matter of the protections perhaps insurable agreeing to the law

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For instance, losses or risks sustained as a consequence of the destruction of one's property,
damage arising out of a person's civil liability, perils sustained due to death of the insured or
losses or risks incurred as a result of bodily damage, illness or accidental death are as a matter of
principle capable of coverage by insurance and, hence, are insurable. On the contrary, losses or
perils due to intentional default, international or civil war, suicide or intentional homicide
inflicted upon the insured are susceptible to be excluded from coverage under insurance, and
thus are not insurable

For occasion, misfortunes or risks maintained as a result of the devastation of one's property,
harm emerging out of a person's respectful liability, perils supported due to passing of the
insured or misfortunes or dangers brought about as a result of substantial harm, sickness or
inadvertent death are as a matter of principle able of scope by insurance and, consequently, are
insurable. On the contrary, misfortunes or risks due to deliberateness default, worldwide or
respectful war, suicide or purposefulness murder delivered upon the insured are vulnerable to be
avoided from scope beneath insurances, and in this way are not insurable by the corporation.

5. Insurance coverage of the company

According to the annual report form the Corporation, the Corporation has given a cover that
worth Birr 1.7 Trillion for life, property & liability insurance. The cover increases from last
year’s same period performance by Birr 151.6 Billion or 9.6%.

6. Challenges of the insurance industry in Ethiopia

Weather
The nonappearance of a broad, adequate quality climate station network remains a challenge.
Lack of understanding about insurance
Insurance isn’t an awfully well-known budgetary benefit in Ethiopia like in numerous creating
economies since numerous falls flat to appreciate the significance of transferring risk.

Highly personalized products needed

Each town and each community confront diverse sorts of risks that ought to be safety net
provider (crop insurance, credit life insurance, health insurance, etc.) and knowing these minor
refinements is crucial to the selection of any protections item. A back up plans can’t fair offer
what they continuously do but at a diminished cost.

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Issue of trust between micro insurer and client

Not at all like the case in credit, where the entrepreneur borrows the cash and takes up the
obligation of returning it, insurance switches the obligation of risk. In loaning, the supplier puts
up the capital and trusts the client to pay it back; in insurance, the policyholder pays up front and
trusts the provider keeps its guarantee to create an installment in agreement with the legally
binding terms.

Excessive politicization of the insurance industry

Without a question, legislative issues play a critical part in insurance companies` operations
depending on the control play & calculations that are prevailing within the working spaces of the
insurance firms. The premiums to pay, the results of chance examinations, and the harms and
benefits to pay depend on political scheme now and then.

Weak manpower

Non-professionals run numerous of the insurance companies nowadays. In reality, numerous

individuals think that what it takes to be a insurance proficient is fair a few information of money
related considers with no specialized preparing. In fact, this has majorly influenced the
steadfastness and operations of insurance firms in this country.

Economic instability

When the country`s economy is down, all insurance companies will be influenced. At such
circumstances, the rates can be influenced such that the insurance companies could be
constrained to extend their rates, rather like intrigued rates on credit offices given by monetary
institutions.

Of course, no client will appreciate this, indeed on the off chance that it is expressed clearly
within the contract that the insurance rates might alter from time to time. In this manner, such
circumstances might make a terrible picture for a company since costumers can spread the data
around a benefit or item they were not upbeat with exceptionally fast.

Mismanagement
As the proprietor of the insurance commerce, one is exclusively dependable for all issues that his
or her clients may have with respect to the administration of the insurance trade. All insurance
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firms that are fumbled can`t stow away their deficiencies for a longer time without the clients
taking note. As time move, there will be a steady increment within the number of clients`
complaints, and on the off chance that his or her insurance firm isn't straightforward, at that point
he or she will lose more clients.

Too, awkward administration may fetch the company a part, especially in the event that they
have destitute communication with their clients. In case an individual`s premiums are tall, he or
she ought to not promote. They ought to seek for a showcase for that approach rather than lying
to the common open or indeed shape procedures whereby the clients cut on costs like giving no-
exam life insurance cites.

Competition

Nowadays, there are numerous protections firms on the showcase in Ethiopia and thus there's an
intensive challenge for insurers. Each company looks for the most ideal way of offering their
insurance items within the best conceivable way and targets a particular group of people. Most
insurance businesses, particularly the unused ones are the foremost questioned companies. In
reality, most individuals believe a few of the existing insurance firms compared to the unused
businesses since the new enterprises are worked on a lean line between disappointment and
success and no one will need to require such risks with the small among of cash that they have.

7. Possible recommendations and suggestions

 One considerable determinant for the practicality of insurance is the huge rate of apparent
policy holders. This makes advertising insurance an empowering recommendation for
commercial safeguards, whose existing client base is within the upper showcase portion.
 The poor individuals have to be actuated to get it comparative preferences of saving,
protection, credit and protections. Mindfulness raising programs have to be attempted by
the government, controllers and safeguards in both formal and casual divisions.
 In coming to the showcase commercial insurers must not as it were consider the salary of
their potential targets but too their possess restricted capacity. At this point, it would be
troublesome for Ethiopian insurers to effectively create and offer health insurance items
on a commercially practical premise, given their restricted capacity. So the need for
benefactor and government offer assistance ought to be considered to maintain wellbeing
protections projects. Most miniaturized scale protections professionals around the world
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 have found credit life insurance, animal insurance and crop insurance are moderately
straightforward items to create and start with.
 Controllers and policymakers must adjust the have to be ensure clients with empowering
industry advancement and development. Five common vital alternatives for insurance
direction have risen propelling existing guarantees, spurring casual guarantees,
encouraging modern insurers, persuading insurance take-up, and integration of insurance
arrangement into financial division approaches

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