ADDIS ABABA—Ethiopia’s insurance sector needs to scale up capacity to face international competition as the country is undertaking economic reforms. Yared Molla, CEO of Nyala Insurance Company said that the overall performance of insurance in Ethiopia is still substantially low.
Insurance penetration (total premium as percentage of GDP) is O.4 in Ethiopia while it is 2.6 in Kenya; premium per capita (insurance density) is 2.9 USD in Ethiopia while it has reached 40 USD in Kenya,“ he added. He went on saying that lack of dynamism and absence of strategic alliance among industry players tightened regulation and lack of skilled manpower as critical challenges faced by the industry.
“We have now a growing middle income class in the country which is an ideal platform for the development of insurance, Insurance sector need to up capacity to face international competition especially life insurance. When the industry is deeply touched by the government’s new reform initiative, there is no doubt that Ethiopian insurers will thrive and grow to be internationally competitive companies,” he underlined. He also expressed his expectation that the incumbent and the regulatory body will give due attention for the expedited change happening to the industry.
Indicating that the company has been making preparation to join and contend in the world market, the National Bank has given assistance to do so. Applauding the economy is open for international companies; his company has been making preparation to work in collaboration with international companies. “In so doing, we are ready to provide options.”
“Currently, the total asset of the industry has reached 16 billion Birr. And of the total premium, 51 percent is gained from motor insurance,” he said. In general, the industry has already paid 3.7 billion Birr for its customers. By now, the sector has a total capital of 5.5 billion Birr.” Nyala Insurance Company has made 769.4 million gross premiums, an increase of 76 percent compared with the preceding year.
Thus the company was able to amass a gross profit of 159.6 million in the year. Eyesuswork Zafu, Developmental Economist on his part said that before facing international competition, local insurance companies should gain training and experience about the concept of competition. Currently, insurance companies are affiliated with a certain political party, religious institution or ethnic groups. International companies are willing to form partnership only based on business interests. So, the domestic market should liberalized first.
The Ethiopian Herald, December 6/2018
BY GIRMACHEW GASHAW
