Ethiopia’s insurance industry is facing growing pressure from digital newcomers as local insurers struggle with low levels of digitalization, outdated processes and weak customer experience, according to a new study presented by industry leaders.
The research warns that unless Ethiopian insurers move quickly to modernize their systems, they risk losing customers and market relevance to InsurTech firms and other non-traditional entrants that are better equipped to deliver mobile-based services, faster claims handling and more convenient policy management.
The study, titled Digitalization and Customer Loyalty in the Ethiopian Insurance Industry: Analysis of the Antecedents and Moderating Factors, was presented by Yared Mola, CEO of Nyala Insurance and president of the Association of Ethiopian Insurers, at a consultative forum on April 23, 2026.
Yared said the domestic market remains dependent on manual, fragmented and paper-based procedures while the global insurance sector is increasingly using artificial intelligence, blockchain and automated systems to underwrite policies, process claims and interact with customers. He warned that the gap is no longer merely about efficiency, but about survival.
“Due to the local insurance sector’s slow pace of change, it faces a high risk of losing customers, losing market relevance, and failing to ensure long-term sustainability,” he said, according to the study findings.
The report identifies leadership hesitation as one of the biggest obstacles to reform. Many insurers, it says, still lack a clear digital strategy, while some executives continue to view technology spending as a cost rather than a long-term investment. The study also says regulation has not kept pace with the market, leaving insurers with weak pressure to embed digital transformation into core business plans.
That delay is creating space for InsurTech firms to move in, the study says. These new players can reach customers more easily through mobile platforms and digital channels, while traditional insurers remain tied to paperwork and slower internal systems.
The findings also suggest that customer expectations are changing faster than the industry. Consumers who have already adapted to mobile banking now expect similar convenience from insurance companies, including mobile apps, online payments and instant SMS updates. The study warns that failure to meet these expectations could accelerate customer loss.
While poor internet coverage outside Addis Ababa and the high cost of broadband remain challenges, the report argues that companies should still act within their current capacity rather than waiting for ideal conditions. It says the lack of centralized data systems is also preventing insurers from using predictive analytics, which are increasingly essential for pricing, risk assessment and claims management.
The study was presented at a consultative forum organized by the Association of Ethiopian Insurers, where senior executives and industry professionals discussed the sector’s digital future. The report noted that 45 percent of the professionals surveyed were between the ages of 41 and 50, while 73.7 percent were men and 26.3 percent women, suggesting an experienced but still unevenly digitized workforce.
The report concludes that survival will depend on stronger board-level commitment, larger digital budgets and closer collaboration with technology firms rather than trying to build all systems in-house. It says the sector must move faster if it is to remain competitive in a market where digital disruption is no longer a future threat, but a present reality.
