Recommendations for Ethiopian Insurance Corporation (EIC):

1. Increase Technological Adoption: To address challenges like public

awareness and operational efficiency, EIC should accelerate the integration of
modern technology in its processes. This includes developing user-friendly digital
platforms for policyholders, enhancing data analytics for better risk management,
and automating claims processing.
2. Diversify Service Offerings: While EIC has made strides in improving its core
offerings, it should explore new product lines, such as micro-insurance for low-
income populations and tailored coverage for emerging sectors (e.g., cyber
insurance or agricultural insurance) to attract a broader customer base.
3. Strengthen Customer Awareness Campaigns: Public education on insurance
benefits, particularly in rural areas, is vital for increasing market penetration. EIC
should invest in comprehensive awareness campaigns to foster trust and drive
the adoption of insurance products.
4. Optimize Claims Management: The large spike in claim settlements in recent
years underscores the need for better claims control. EIC should enhance its risk
assessment procedures and adjust premium models to ensure that claim
payments are aligned with the company's financial capacity and risk projections.
5. Improve Capital Reserves: Although EIC has significantly increased its risk-
bearing capacity, maintaining robust reserves is critical for mitigating risks,
especially in times of large-scale claims. Increasing capital reserves through
strategic reinvestment and risk-based pricing will ensure long-term stability.

Conclusion:
Ethiopian Insurance Corporation has demonstrated impressive financial growth and
resilience, notably in increasing premiums, expanding its market share, and improving
its risk-bearing capacity. However, as the industry evolves, it must address challenges
like claims volatility and limited public awareness. By embracing digital innovation,
diversifying its offerings, and continuing its focus on customer education and financial
sustainability, EIC can solidify its position as a leading insurer in Ethiopia, contributing to
the broader national economic development.
SWOT Analysis of Ethiopian Insurance Corporation (EIC)
Strengths:

1. Strong Market Position:

 As one of the largest state-owned insurers in Ethiopia, EIC has
a dominant market share (around 30.4%) and is a recognized player in
the insurance sector.

2. Growing Financial Performance:

 EIC has shown strong financial growth, including record profits (e.g., Birr
1.2 billion before tax in 2024). Its premium income has seen steady
increases, reaching Birr 7.6 billion in 2024.

3. Expanding Operational Footprint:

 The corporation has 125+ branches across Ethiopia, ensuring
widespread accessibility. This helps build trust in rural and underserved
regions.

4. Increased Risk-Bearing Capacity:

 EIC has significantly improved its risk-bearing capacity (exceeding Birr
6 trillion), which enhances its ability to manage large-scale claims and
ensures financial stability.

5. Government Support:
 Being a state-owned company, EIC benefits from government backing,
potentially providing stability during economic downturns.

Weaknesses:

1. Claims Payout Volatility:

 A sharp 327% increase in claims (e.g., to Birr 5.4 billion in 2021/22)
suggests that the company faces volatility in claims payouts, which may
strain financial stability. This highlights the need for more efficient claims
management and pricing adjustments.

2. Limited Technological Integration:

  While there is an ongoing push for modernization, the adoption of
technology is still limited. The company lags behind in terms of digital
transformation, which could lead to inefficiencies and poor customer
experience in an increasingly tech-driven market.

3. Public Awareness and Trust:

 Despite its large footprint, there remains low public awareness about the
benefits of insurance, especially in rural areas. This limits the company's
ability to capture a larger segment of the population.

4. Over-reliance on Traditional Insurance Products:

 EIC mainly focuses on traditional insurance models. There's a need to
innovate and diversify its product offerings to cater to emerging customer
needs, such as cybersecurity insurance or agriculture-based
insurance for Ethiopia's largely agricultural economy.

Opportunities:

1. Expanding Digital Services:

 EIC can leverage technology to enhance customer experience and
operational efficiency, offering online policy management, digital
claims, and customer support platforms. This can also help penetrate
more remote markets.

2. Micro-Insurance for Low-Income Groups:

 Given Ethiopia’s vast low-income population, EIC has an opportunity to
expand its portfolio by offering micro-insurance products aimed at the
underserved market.

3. New Product Development:

 There is a growing demand for specialized insurance products, such
as agricultural insurance, climate risk insurance, and cyber
insurance, which EIC can develop to meet the evolving needs of the
Ethiopian economy.

4. Regulatory Changes:
 The introduction of an independent commission to regulate the
insurance sector in Ethiopia could create a more stable and transparent
regulatory environment, which may help increase customer confidence
and industry growth.
 5. Increasing Economic Development:
 As Ethiopia’s economy continues to grow, more businesses and
individuals will seek insurance, offering EIC the opportunity to expand its
customer base and increase premiums collected.

Threats:

1. Intense Competition:
 The Ethiopian insurance market is becoming increasingly competitive,
with private insurers challenging EIC’s dominance. New entrants could
disrupt market share and force price reductions.

2. Political and Economic Instability:

 Ethiopia has faced periods of political unrest and economic challenges.
While EIC’s state ownership provides some protection, the broader
instability could threaten business operations and investment returns.

3. Rising Claims and Underwriting Losses:

 The continued rise in claims payouts (e.g., the 327% increase in
2021/22) could undermine EIC’s profitability if not effectively managed.
Furthermore, underwriting losses may persist if premium adjustments
are not made to reflect actual risk exposure.

4. Limited Technological Infrastructure:

 The lack of adequate technological infrastructure in Ethiopia,
particularly in rural areas, may limit EIC’s ability to modernize its services
and expand digital solutions for customers.

5. Public Perception of Insurance:

 Insurance is often seen as a luxury or unnecessary service by many
Ethiopians. Changing this perception and creating widespread
trust remains a significant challenge, especially in rural areas where
insurance penetration is low.

Last 1 year business performs

 The Ethiopian Insurance Corporation (EIC) announced a pre-tax profit of over Birr 1.6 billion for the
2023/24 fiscal year. The corporation revealed its achievement during its 37th annual meeting with
senior management.

The profit marks a 7.5% increase compared to the company's projections and a 15% rise from the
previous year’s results. EIC also recorded Birr 8.6 billion in premium income, achieving 92.4% of its
target. The company’s share of the total industry premium stood at 30.4%.

Additionally, EIC handled and renewed 178,970 contracts, a 10.9% growth from the previous year,
accomplishing 96.4% of its goal. The total guarantee coverage for these contracts reached Birr 6.4
trillion, reflecting a 43.9% increase from the same period last year.

Information policy

The Ethiopian Insurance Corporation (EIC) is a state-owned enterprise that

plays a vital role in the country's insurance sector. Here are some key points
regarding its policies and operations:

### Overview

- **Establishment**: EIC was established to provide comprehensive insurance

services to individuals and businesses in Ethiopia.

- **Services Offered**: The corporation offers various types of insurance

products, including life insurance, health insurance, property insurance, and
vehicle insurance.

### Key Policies

1. **Regulatory Framework**: EIC operates under the guidelines set by the

National Bank of Ethiopia, which regulates the insurance industry.

2. **Customer Protection**: The corporation has policies in place to ensure

transparency and fairness in dealing with customers, including clear
communication of terms and conditions.

3. **Financial Stability**: EIC aims to maintain financial stability and solvency

to meet its obligations to policyholders.

4. **Risk Management**: The corporation implements robust risk

management practices to mitigate potential losses and manage claims
effectively.
5. **Community Engagement**: EIC is involved in community development
initiatives, promoting awareness about insurance and its benefits.

### Recent Developments

- **Digital Transformation**: EIC is embracing technology to enhance service

delivery, including online policy purchases and claims processing.

- **Product Diversification**: The corporation is continually developing new

insurance products tailored to the needs of the Ethiopian market.

Corporate social responsibility

The Ethiopian Insurance Corporation (EIC) actively engages in social

responsibility through various initiatives These include disaster relief,
promoting public awareness about insurance supporting education and
research, and contributing to environmental sustainability. EIC has also been
involved in providing affordable insurance solutions for vulnerable
populations and addressing public health needs, such as during the COVID-
19 pandemic. Additionally, the corporation supports local community
development and sustainable practices to help improve the socio-economic
conditions across Ethiopia