The state owned insurance company, Ethiopian Insurance Corporation (EIC) asset rises to 18 billion birr, while reaching an annual premium of over 6.1 billion birr. Additional to its existing services, the company is waiting a green light from the National Bank of Ethiopia (NBE) to start the COVID-19 clinical trial insurance policy.
As the CEO Netsanet Lemessa said, the company has submitted its interest to the national bank in January last budget year and is still waiting for the approval from the NBE. As Netsanet said, NBE is working its assessment on the issue.
In its performance of the completed budget year, the company has registered 6.1 billion birr in premium revenue collection which is the highest tax revenue and 17.1 percent higher than the target. The amount of premiums registered during the fiscal year was 23.5 percent or 1.2 billion birr more than the previous fiscal year.
Of the total premiums registered, 5.9 billion birr or 96.5 percent of the total insurance was registered, while the remaining 216 million birr or 3.5 percent was registered in the long-term life insurance sector, according to the CEO. Netsanet said that the company has collected 44 percent of the premium in the insurance industry in the current fiscal year. He also explained that the annual plan was 89 percent, an increase of 52 percent compared to the same period last year.
The company has also secured 3.2 trillion birr from contract sales during the fiscal year, down 8.6 percent from the same period last year. The CEO attributed the reduction to the reduction in the number of passengers due to the CV-19 in the aviation security sector. In the fiscal year, it reported a total of 162,890 contracts for sales and renewals, which is 1 percent higher than the same period last year. The target was 98.7 percent of the target.
The company has also paid 1.3 billion birr in compensation during the fiscal year. This is an increase of 81 percent from the plan and 18 percent compared to the same period last year. The total insurance share is 1.2 billion birr or 93.8 percent, while the long-term insurance sector accounts for 79 million birr or 62 percent.
Regarding the company’s expenditure during the fiscal year, the compensation rate is 47 percent, which is lower than the plan and the industry’s compensation rate. One of the reasons why the company was able to make a huge profit of 1.12 billion birr during the fiscal year is that the compensation was low.
According to the company’s annual report, 1.4 billion birr worth of contracts were registered in the fiscal year. The total insurance sector has 1.39 billion birr and the long-term insurance sector has 13.2 million birr, which are 32.7 percent higher than the target and 54.7 percent higher than the previous fiscal year.
Despite the company’s successful performance during the fiscal year, it has not been able to achieve the desired results and move in certain areas. Ethiopia’s social, economic and political instability and ongoing conflict in the Tigray region are the major issues identified in the industry. As the CEO explained branches in the region have operated less than 40 percent of the plan.
Beside the COVID 19 epidemic, the rising cost of spare parts and maintenance costs along with foreign exchange rates are other challenges that are pushing the company to spend more than planned.
Other problems identified during the fiscal year include poor performance in construction project due to various challenges, delayed procurement and implementation of consulting services, and high competition in the cost-effective industry.
“Despite the problems identified during the fiscal year, the company’s performance is impressive,” said the CEO.
“As part of the life insurance, the company is preparing to do the same for the policy that covers all clinical trials by widening the scope,” said the CEO.
EIC shares are about 50 percent of the overall insurance market share in addition to the other 18 insurance companies in the country.