Could you present the Ethiopian Insurance Corporation, its history and main services and activities?

Ethiopian Insurance Corporation was established in January 1976 by nationalizing the then 13 private insurance companies. Since establishment EIC served as a sole insurer for about 19 years. In 1994 after liberalization of the economy the government has allowed local investors to establish private insurance companies. Since then EIC has lost its monopolistic role and eight private insurance companies joined the insurance industry.


Do you plan to diversify your products?

Yes. We have to develop new products and review the existing ones to diversify our business and to meet the need of our customers. Currently we are attempting to introduce life insurance policies up to grass root level. This is because life insurance is not well known and less developed in Ethiopia when compared to other African Countries. We would also like to educate clients about this because only people living in the city or working in companies are aware about the usefulness of life insurance. We have a plan now to penetrate down to the peasants. Regarding non-life insurance products also we do not stick only to old standard products. We see the demands of our clients and come up with tailor made suitable products; because to stay in the market we have to be able to meet the demands of our clients.


Regarding the other 8 players in your sector, what are your competitive advantages?

The very fact that we have been in the insurance industry for a long time by itself is a good asset. We have got certified insurers and a well-experienced staff in the field. We have a strong financial base and a reliable reinsurance arrangement with best reinsurers in the world; which make us able to cope with any claims. We provide all types of property, liability and life insurance products. All these strengths make EIC more competitive than other insurance companies in the country.


Have you experienced difficulties to pass from a monopolistic market to an open market?

Initially, there was a problem because all the employees feel as if they are in a monopolistic state but we have done our best to change this attitude to market oriented service and develop efficient service rendering in the Corporation. This was the difficulty.

Have you restructured the company?

Yes. The Corporation was restructured twice and we have revised the limit of authority of our Main Branches and Branches to empower them to give more decisions on operational issues. This gave us an opportunity to act efficiently and compete with private insurance companies.

Is the government thinking of privatizing for the Ethiopian Insurance Corporation?

This will totally depend on the decision of the government. But the Corporation since its establishment is very profitable. Last year also the Corporation earned 52.5 million birr (USD 6 million) profit before tax.

How many clients do you have?

Our clients are mixed. We have clients from the government sector, from the public sector, from the private sector and financial sector also. In Ethiopia the public sector is large and it is also with us. Also private sectors are with us, except those which are tied up with other private insurance companies as shareholders.

How many employees do you have?

Currently we have 1074 employees.

Do you have foreign insurance partners?

Yes, we have a very good and long established relationship with internationally renown reinsurers such as Munich Reinsurance. In addition, African Reinsurance Corporation and Hanover Reinsurance have also good working relationship with us.

How do you see your company in the next 5 years? Do you have plans to expand abroad?

We have a vision to render a very effective and efficient service to the public. We want to be chosen as the best insurance provider to the public and to this effect, we want to have more market share than we have now. And above this, we have a vision of expanding not only in Ethiopia, as there is an opportunity in COMESA countries we will be looking to have some business in those countries.

What is your action plan to materialize your vision?

In fact, in a short-term we have plan to gather the necessary information on the COMESA market. But we feel that there is an opportunity to participate in COMESA and do some businesses in those countries.

Could you give us an overview of the insurance sector in Ethiopia?

Initially, when the market was opened to the competition there were some problems. One of the problems that face the industry was price-cutting. The newly formed insurance companies took price-cutting as a means/method of attracting more clients. At the beginning it seems that this method was working because some of our clients were attracted by the low price they offered and give their insurance covers to private companies. However, the National Bank who is the supervisory body of the insurance industry step in to halt such a unethical method of competition. Because in the final analysis this malpractice will hurt the economy of the country.

The other problem was an attempt to attract customers by providing services which are not particularly the duties of insurance companies such as unconditional bonds specifically financial guarantee bonds. But, recently the National Bank ordered insurance companies to stop providing financial guarantee bonds to their clients.

Currently, it seems that the insurance market came to it sense; because using price cutting or as some describe it 'price war' method is decreasing and issuing financial guarantee bonds is completely stopped.

Recently, the Association of Ethiopian Insurers is also trying to solve some problems related to insurance by discussing with its members. Above this the association bring the serious issues that harm the well being of the industry to the attention of the supervisory body.


What are you doing in order to attract clients locally?

We are using different methods. We have main intermediaries, we have sales agents, and initially we have even salesmen's in the Corporation. We are using sales agents throughout the country. We are also doing direct business as well as through brokers. Every branch manager and every manager here in the head office is also a marketer. In addition we review our existing rates, prepare suitable new products and packages, we also continuously examine our service.

Why should foreign investors buy insurance from your company?

The main reason why they prefer us is the long-experience we have in the industry, a qualified staff we have and a good financial strength. The Corporation is also a rated company; the rating is organised by African Insurance Organisation with the cooperation of UNCTAD and Standard and Poor's London. The Corporation is rated as B-strong in January 2002 and May 2003. This rating has direct relation with our good financial strength, good reserves and good claims handling, as well as meeting the claim demands instantly. The other thing is we give services efficiently to our clients and we are always trying to make a better improvement. We are always trying to improve our services. If investors come they can get any product from us, and at the time of claim we are able to indemnify them.

Could you give us names of foreign companies working with you?

Companies which run big projects such as Al-Karafi which undertake the big projects like the newly built modern air port in Addis, China Road and Bridge Corporation which constract 'Ring Road'.