Last month, I had a minor fender-bender. A jolting reminder of Addis Ababa’s chaotic traffic, but thankfully, nothing more. No one was hurt, and the damage to my car was, by all accounts, manageable. While the incident itself was thankfully inconsequential, the journey that followed became a profound lesson on a system in crisis. As a law-abiding citizen, my first instinct was to reach out to the institution designed for this very moment – my insurance company. For years, I had been a loyal customer, faithfully paying a premium of nearly one hundred thousand Birr, building a history with no claims. I was, in their terms, a profitable and low-risk client. I believed in the promise of protection, the entire premise that we collectively pay into a pool of risk so that the individual is spared catastrophe.
The initial response was deceptively smooth. A polite customer service agent outlined the required steps: obtain a police report and await an assessment from their engineer. It felt reassuringly standard. I was wrong. The first gatekeeper was the assessor. His job is to determine the cost of repairs. But it quickly became clear that his assessment was less about the damage to my car and more about the undiscussed “fee” required to ensure his report accurately reflected that damage. A nudge, a tip, an “incentive” – whatever you call it – was necessary to be “convinced” that a damaged part needed replacement, not just a cheap patch-up. The principle of indemnity – of being restored to one’s original state – felt less like a right and more like a privilege to be bargained for.
This was merely the prelude. The real battle commenced with the claims department. If the assessor’s game was one of subtle implication, the claims officers were openly and wearisomely skeptical. The tone was not of a service provider assisting a client in a moment of need, but of a suspicious official guarding the treasury from a clever thief. Every interaction was laced with an underlying accusation, as if my claim was an attempted heist rather than the fulfillment of a paid agreement. The paperwork seemed designed to be complex, the follow-ups required an extraordinary patience, and the progress was freezing. Each phone call became an exercise in pleading, a humbling experience of begging for the very service I had financed for years. A full month after the incident, my car remains a silent testament to this paralysis, a symbol of the “protection” that never materializes.
In sharing this frustrating experience with friends, I was met not with surprise, but with knowing nods and unanimous validation. Two of them stated that this exact reality is why they opt for only the legally mandatory third-party insurance. Their logic is a damning indictment of the entire sector: if the outcome of paying a substantial premium is ultimately the same – having to fight, pay out of pocket, and endure immense stress – then the rational choice is to self-insure. Why pay a large sum annually for the mere illusion of support, only to be met with resistance when you need it most? My minor accident, rather than showcasing the value of insurance, served to perfectly validate their cynical but pragmatic approach. It seems the safer bet is to simply save your money and pray you avoid a major disaster.
This collective sentiment points to a deep, systemic failure within Ethiopia’s insurance industry. The prevailing model appears overwhelmingly traditional and adversarial, where companies compete fiercely to win premiums but are culturally and operationally engineered to shy away when a claim is due. The market is filled with players who seem to mimic each other’s worst practices, sticking to conventions that prioritize premium collection over customer satisfaction. Profit is seemingly derived not from intelligent risk management and efficient service, but from the deliberate complication and delay of rightful payouts. This stands in stark contrast to insurance sectors in other parts of the world, where disruption and innovation are the norms. Companies there compete on the speed of claims settlement, the ease of digital processes, and the quality of customer support. A claim is seen as a critical moment of truth – an opportunity to prove value and cement loyalty. In Ethiopia, the sector feels devoid of such innovation, clinging to an old- school ethos of client relationships that is fundamentally broken.
The broader implication of this failure is a tragic erosion of trust and a significant opportunity cost for the nation’s economic resilience. When a population cannot rely on the fundamental concept of insurance, the principle of shared risk collapses. People are forced into vulnerability, leaving themselves, their families, and their assets exposed to genuine catastrophe without a safety net. This distrust stifles economic growth, discourages investment, and perpetuates a cycle of financial insecurity. My minor accident was a wake-up call that extended far beyond the dented metal. It revealed a broken promise and a sector in desperate need of a paradigm shift – one that views the policyholder not as an adversary to be managed, but as a client to be served.
The National Bank of Ethiopia (NBE), as the sector’s regulator, holds the pivotal authority to catalyze a cure for this systemic malaise by moving beyond setting capital requirements and enforcing a paradigm of customer-centric governance. This necessitates mandating transparent, standardized claims processes with strict service-level agreements (SLAs), instituting rigorous independent audits of claims handling, and introducing public metrics on claim settlement ratios and customer satisfaction to foster genuine competition on service quality rather than just premium collection. By wielding its regulatory power to penalize bad faith tactics and incentivize innovation – such as promoting digital filing and automated assessments – the NBE can transform its role from a passive overseer into an active architect of a resilient, trustworthy insurance market that finally serves the Ethiopian public, thereby restoring the very foundation of shared risk it is meant to protect. Until that shift occurs, for a growing number of Ethiopians, the most rational insurance policy will remain a personal savings account and a great deal of hope.
William Brooks – A freelance consultant with interests in business and politics in East Africa reachable at willybrooks87@gmail.com
