Insurance business in the country has been a long business since 1950s; however, because of economic stagnation and inconvenient policies pursued by the previous regimes, the business did not flourish as it was expected to be.
Two decades ago, since the current government took power, new policies that stimulated financial sectors formulated and implemented. According the World Bank’s studies, almost 90 percent of the population has no any kind of insurance in Ethiopia and much work should be done to bring the marginalized people to the market.
Recently, Nyala Insurance Company has made its 21st regular meeting here in the capital. At the opening ceremony, the company board chairman Kemal Mohamed said that for the nation’s rapid economic growth the construction of infrastructure by the private as well as public sectors is highly essential.
According to the board chairman, the last budget year for the Ethiopian Insurance industry was better as compared to the previous time. The Nyala Insurance Company (NIC), in the 2014/15 budget year, made 101 million net profit; the registered profit is the result of the relentless effort made by the company staffs, he added.
Kemal further said that the growth and effectiveness of any company depends on its well qualified and organized man power and in that regard, the company has made much progress.
On the other hand, to support the insurance industry in the man power supply, with the cooperation of the Ethiopian National Bank, NIC trained 30 men and women. With regard to equipping the company with new Information Technology System, it also signed agreement with Nesco International enterprise.
The company’s CEO Yared Molla on his part said that according to the global think thank group known as SIGMA in the year 2014, the amount of Global Premium Income has risen by 3.7 per cent as compared to the year 2013 and the total account reached to 4.8 trillion dollar and out of it 55.6 per cent paid for life insurance coverage while 2.1 per cent paid for property insurance.
The general premium income rose to 46 billion dollars and out of it 66.4 per cent paid for covering life insurance and 33.6 per cent paid for property insurance and as compared to the world insurance market the share of Africa is 1.44 which is very small. In Ethiopia, according to the National Bank, in the budget year of 2014/15 the registered premium was 5.6 billion Birr and comparing to the budget year of 2013/2014, it grew by 12 per cent.
In the World and Africa, the paid premium rate of life insurance is higher than the property insurance. In the Ethiopian context, the paid premium is still not more than 6 per cent and this implies that creating awareness is essential.
Yared further said that life insurance helps encouraging public to save money that can be used for sustainable development. In order to encourage the public to pay premium for life insurance, deregulating the rules that are applied on the insurance business is essential. In this regard, the provision of incentive including easing tax of customers is essential.
Currently, the government, in the second Growth and Transformation Plan emphasizes on the expansion of manufacturing sector which is expected to attract foreign investors; hence, the availability of functioning insurance companies should be understood that they can play a crucial role by creating enabling environment.
The nation has abundant and untapped natural resources that can be used as an input for the flourishing industries which brings hope for poverty reduction. Now the nation’s industrialization policy has become instrumental for reinvigorating both foreign and domestic investors to play crucial role in boosting the economy.
The emerging economies tell us that the insurance industry developed over the long time. Though they are witnessing progress, industry is facing so many challenges; among these: low insurance awareness and skilled professionals, absence of attractive bundle of insurance products and low level of integration among insurances to overcome common problems.
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