Thus, from 1975 to 1994, there were four state-owned banks and one state-owned insurance company, namely the National Bank of Ethiopia (Central Bank), the Commercial Bank of Ethiopia, the Savings and Housing Bank, the Development Bank of Ethiopia and the Ethiopian Insurance Corporation. After the overthrow of the Dergue regime by the EPRDF, the transitional government of Ethiopia was established and the New Economic Policy for the Transition Period was published. This new economic policy replaced the centralized economic system with a market-oriented system and introduced the private sector. In the early 1990s, several private companies were created, including Oda S.C., which came up with the idea of creating a private bank and a private insurance company in anticipation of a law that would open the financial sector to private investors. However, certain abuses of customer service, unfair claims practices against innocent and ill-informed insurance consumers, rudimentary and unhealthy forms of competition in the insurance industry (such as unjustified price reductions by insurers to attract consumers) have been reported in some newspapers and in some insurers` annual reports. (Source: Insurance in Ethiopia, Hailu Zeleke, 2007, pages 50-51) The Ethiopian Insurance Corporation (EIC) was established in 1976 by Proclamation No. 68/1975. The company was formed by taking over all the assets and liabilities of the thirteen nationalized private insurance companies, with Birr`s paid-up capital of $11 million ($1.29 million) pursuing the following objectives. Premium increases have been very large and volatile in a few years. Auto and marine insurance accounted for the majority of gross premiums written and insurance activities. The following year, two insurance companies were closed and only 13 remain; but these 13 lasted until 1974, when the Dergue regime came to power.
On 1 January 1975, these 13 insurance companies were nationalized in accordance with the proclamation of the Provisional Military Government. The government merged the 13 companies and established the Ethiopian Insurance Corporation as a monopoly in the insurance sector by proclamation 26/1975. The Ethiopian Insurance Corporation operated as a monopoly for nearly two decades until 1994. After the 1974 revolution, on 1 January 1975, all private banks and 13 insurance companies were nationalized and, together with state-owned banks, placed under the coordination, supervision and control of the National Bank of Ethiopia. Ethiopian Insurance Corporation is the result of the merger of 13 insurance companies. Now let`s focus on the sales situation in Ethiopian life insurance. Do we have enough information on the pace of growth of life insurance in Ethiopia? How fast or how fast did it grow, if any? Yes, we have information. It may not be complete in all respects, but it is nonetheless indicative of its overall size and historical growth trends. Let`s take a brief overview of the information available in the 1960s.
There was no organized information on life insurance (to my knowledge). According to Hailu Zeleke`s book, Insurance in Ethiopia, 2007, page 55, it is said in the 1960s: “The Ethiopian Life Insurance Company and the Ethiopian-American Life Insurance Company only offered life insurance. Lion Insurance was active in the life and non-life insurance sectors. The remaining ten companies were engaged only in non-life insurance activities. It should be noted that Nyala`s management recognizes that this relatively better long-term segment growth in the Ethiopian context is no reason to rest on its laurels. Ato Yared Mola, CEO of Nyala Insurance, S.C., highlighted in his annual report to shareholders and board members the need to expand the market in the life segment and other products in the long term. He highlighted the relatively large contribution to gross revenues that this segment makes to insurers in other economies with mature insurance markets.
