PART TWO

LICENSING INSURANCE BUSINESS

3. Requirement for Obtaining License

• Restrictions on foreign ownership of insurance companies and business operations in Ethiopiao

transact insurance business in Ethiopia, a license is required from the National Bank.

• No one can use “insurance” or “insurer” in their business name without obtaining a license from the
National Bank.

• Without prior approval, insurers are prohibited from: a) Operating at unauthorized locations or closing
existing ones b) Introducing new insurance products c) Merging with or acquiring another insurer d)
Transferring policies or selling their business e) Disposing of property outside the normal course of
business f) Redeeming shares or reducing capital through means other than operating losses g)
Amending their memorandum or articles of association h) Changing their licensed business name

• The National Bank may request documents and inspect them to determine if someone is conducting
insurance business without a license.

• If someone conducts insurance business without a license and receives premiums, the National Bank
can apply to the Federal High Court for an order to return premiums or ensure the person fulfills their
contractual obligations

4. Conditions of Licensing

• Complete application with specified documents.

• Payment of investigation fee to National Bank.

• Weekly notice of intent to engage in insurance business published for four weeks.

• Company formation with approved memorandum and articles of association.

• Subscription and payment of shares; minimum one-fourth paid in cash.

• Minimum paid-up capital deposited in a blocked account.

• Qualification criteria for directors and senior executives.

• Propriety criteria for influential shareholders.

• Submission of risk management, reinsurance, internal control, and IT system proposals.

• Submission of a sound business plan.

• Unique company name not similar to existing insurers. • Business premises meeting National Bank
standards.

• Public objection period for founders’ involvement.

• National Bank inquiry into objections.

5. Issuance of License

• License issued by National Bank after evaluation.

• Possible conditions or limitations on license.

• Decision within 90 days of receiving all information.

• License specifies authorized classes of insurance.

• License issued upon payment of licensing fee.

• License constitutes final authorization.

• National Bank can amend license conditions.

• Licensing of reinsurers and reinsurance brokers.

6. Business Purposes

• Insurer may carry on licensed insurance business and approved ancillary activities.

• Long-term insurance ancillary activities include investment consultancy, real estate brokerage, and
support to insurance brokers.

• General insurance ancillary activities include risk management consultancy and motor vehicle repair
centers.

• Issuance of investment-insurance linkage products with approval.

7. Commencement of Operation

• Implementation of information management, internal control systems, and risk management policies
before operation.

• Operation commencement within 12 months of license issuance.

8. Renewal of License

• Renewal conditions determined by directive.

9. Publication of Licensed Insurers

• National Bank publishes list of licensed insurers annually and updates promptly.

10. Prohibitions

• Restrictions on foreign ownership of insurance companies and business operations in Ethiopia.