CHAPTER EIGHT

INSURANCE BUSINESS IN ETHIOPIA

8.1 Origin & Development of Insurance in Ethiopia

 The origin of insurance business in Ethiopia was in the year
1905.
 The major role was played by Bank of Egypt in establishing
insurance business in Ethiopia. At that time, Bank of Egypt
had been an agent of a foreign insurance company.
 The major concentration was on fire insurance & marine
insurance.
 In 1954, a study was conducted to improve the insurance
operations in Ethiopia. The study was conducted by Ministry
of Trade & Industry.
• At that time, there were 19 insurance companies operating in
Ethiopia. Out of 19, only Imperial Insurance Company was as
Ethiopian insurance company established in 1954. The
remaining 18 companies were acting as agents of foreign
insurance companies.
In 1960
•the number of insurance companies operating in Ethiopia
increased to 33. out of 32, only 9 companies had been registered
as life insurance companies, and there were only 541 life
insurance policies issued by these 9 companies.
Proclamation 1970: (No.:281)
• In order to have an effective control over the insurance
companies in Ethiopia, the government announced the
declaration on October 8th 1970.
• This proclamation is also considered as one of these basic
proclamations that had brought about a significant change in
the insurance industry.
•It also laid for the first time, the basic principle that enables the
government to control the insurance industry in an effective way.
•Thus, ultimately the authority to control the insurance
companies was given to the Ministry of Trade & Industry.
• As per the provisions of the proclamation, the Insurance
Council was established.
•The following are the important functions of the Insurance
Council;
1. Controlling & encouraging insurance business in the country.
2. Developing & implementing policies/strategies that creates a
favorable conditions for re-insurance & investments.
• At that time, the Licensing Authority was with the Insurance
Controller Office. It has given licenses for the following
15 domestic Insurance Companies, 36 agents of insurance
companies, 7 brokers, 11 loss adjustors and 3 actuaries.
• After four years, i.e. in 1975, the Transitional Socialist
Government of Ethiopia (later, the Ethiopian Socialist
Government) had nationalized and united the then existing
private insurance companies and thus Ethiopian Insurance
Corporation was officially established on January 1, 1976.
•The EIC was monopoly for the past 19 years and the revenue
earned by EIC had grown from Br.50 million (in 1976) to Br.254
million (in 1993/94).
Proclamation No: 86/1994
 End of Communist regime, a new proclamation, under Proclamation
number 86/1994, was declared with the aim of encouraging the
participation of domestic investors in the insurance business.
 According to this proclamation, the National Bank of Ethiopia is
authorized and assigned to exercise basic duties regarding the operation
of insurance in the country.
•Besides, the NBE started performing the following duties;
1. Giving recognition to any newly emerging insurance companies in the
country, by way of issuing licenses to them.
2. Controlling the overall functions of the insurance companies in the
country.
3. Devising & implementing the efficient strategies to develop the insurance
services in the country.
• As per Article 201/1994, the paid-up capital of the EIC was
increased to Br.61 million.
• By year 2000, the total capital of all insurance companies went
up to Br.340.2 million. At present, there are about 1844
employees working in some 95 branches throughout the
country
 Government Regulation of Insurance

• Government has laid down rules governing the

conduct of business, and insurance is no
exception.
Why insurance is regulated?
1. to protect interest of insured when the contract
is made
b. Insurance is affected by a complex agreement that few lay
people understand and by which the insurer could achieve a great
and unfair advantage if disposed to do so.
c. To decide fair premium charge (take in account the ability of
insured
d. Insurance is regulated to control abuses in the industry
 List Insurance Companies in Ethiopia

S/N Name Established Date Type(life & non-life Ownership

insurance)

1 Ethiopian Insurance Corporation 1975 Both Governmental

2 Africa Insurance company S.C 01/12/1994 Both Private
3 Awash insurance company S.C 01/10/1994 Both >>
4 Nile Insurance company S.C 11/04/1995 Both >>
5 National Insurance company of Ethiopia S.C 23/09/1994 non-life insurance >>
6 Nyala Insurance company S.C 06/01/1995 Both >>
7 The United Insurance S.C 01/04/1997 Both >>
8 Global Insurance Company S.C 11/01/1997 non-life insurance >>

9 Nib Insurance Company S.C 01/05/2002 Both >>

10 Lion Insurance Company S.C 01/07/2007 non-life insurance >>

11 Oromia Insurance Company S.C 26/01/2009 Both >>

12 Abay Insurance Company S.C 06/07/2010 non-life insurance >>

13 Berhan Insurance Company S.C 24/05/2011 non-life insurance >>

14 Tsehay Insurance Company S.C 08/03/2012 non-life insurance >>

15 Ethio life & General Insurance Company 23/10/2008 Both >>

S.C
16 Lucy Insurance Company S.C 2011 non-life insurance >>

17 Bunna Insurance Company S.C 2012 non-life insurance >>

End of chapter 9!

Thank You
 Questions
1. Define Reinsurance?
2. list down reasons re insurance?
3. Explain Types of Re insurance?
4. When the insurance business began in
Ethiopia?
5. Explain the objectives of 1994 proclamation?