The Ethiopian Insurance Corporation (EIC), the nation’s leading insurance provider, has reported robust premium growth for the 2024/25 fiscal year, marking a milestone in the company’s performance amidst a challenging claims environment that poses significant risks to profitability.
During its 38th Annual Management Conference, held under the theme “Adapting. Advancing. Achieving,” EIC’s senior leaders from across Ethiopia convened to review a year of strong financial results alongside pressing operational challenges. The conference set the stage for strategic initiatives designed to maintain EIC’s leadership while navigating an increasingly complex insurance landscape shaped by Ethiopia’s rapid economic transformation.
According to EIC’s Chief Executive Officer, Abel Tadesse, Ethiopia’s insurance industry experienced vigorous growth of 45% in the fiscal year, with total premium revenues reaching an unprecedented 41.13 billion birr. The general insurance sector dominated the market, accounting for 38.49 billion birr or 93.6% of total premiums, while the life insurance sector contributed 2.63 billion birr, representing the remaining 6.4%.
EIC’s own premium revenue rose significantly to over 13.3 billion birr, with general insurance generating approximately 12.9 billion birr and life insurance bringing in around 428 million birr. While this achievement was 9% below the company’s annual target, it still reflected an impressive 56% increase over the prior fiscal year. This strong performance helped the corporation increase its market share from 30.2% to 32.5%, retaining its position as the industry leader. Over the year, EIC issued a total of 170,479 insurance policies — 164,346 for general insurance and 6,133 for life insurance. However, a policy retention rate of 58% was identified as an area requiring improvement going forward.
Despite these gains, Abel sounded a cautionary note regarding the rapid increase in compensation payments. Total compensation payouts reached a record 6.56 billion birr, soaring 137.9% above the previous year’s payouts. This dramatic rise primarily stems from external economic factors, particularly the weakening purchasing power of the birr amid persistent inflationary pressures. Inflation has driven up costs for key items covered under claims, including spare parts, garage services, and medical expenses, escalating compensation obligations significantly.
Although the final quarter of the year saw a concerted effort to reduce outstanding claims reserves, bringing them down to 3.8 billion birr, the surging compensation payments remain a threat to the company’s long-term profitability.
EIC’s financial results nevertheless remain solid, with a net loss ratio at 51.4%, underwriting profits exceeding 3 billion birr, and investment income contributing over 70% to total income, amounting to 1.27 billion birr. Pre-tax profit for the fiscal year hit 1.98 billion birr, slightly surpassing internal targets by 1.7%, and representing an 18.8% increase relative to the prior year.
Within this context of growth and challenge, the CEO also highlighted internal hurdles that have hindered EIC’s modernization efforts. Project delays and weaknesses in the ongoing digital transformation initiative have slowed the organization’s ability to update its systems and improve operational efficiency. Additionally, a reduction in donor-funded programs has dampened revenue growth, particularly within the life insurance segment.
Addressing these multifaceted challenges, the Ethiopian Insurance Corporation is crafting a range of strategic initiatives expected to shape its future trajectory. The company is developing a new corporate strategy complemented by an enhanced human resources approach and an employee performance evaluation system. These organizational reforms, awaiting board approval, are intended to provide a strong foundation for continued success and competitiveness.
Looking back on five decades of service, EIC positioned itself as a reliable partner for Ethiopian consumers and businesses alike and anticipates celebrating its Golden Jubilee with renewed enthusiasm. The leadership expressed full confidence that the corporation will continue consolidating its market advantage by building on its proven strengths and successfully adapting to emerging challenges.
