Radar | Dec 20,2025
May 4 , 2026
By BEZAWIT HULUAGER ( FORTUNE STAFF WRITER )
New governance standards will require insurers to appoint independent directors and establish specialised risk management and internal audit functions. The Ethiopian Insurance Corporation (EIC) currently maintains a dominant 33.9pc share of the general insurance segment. Fikru Tsegaye of Ethio-Re stated that the credibility of this transition will depend on merit-based and transparent appointments to the new Authority.
The domestic insurance industry is approaching its largest regulatory overhaul in decades, with a bill set for this year that would transfer supervision from the National Bank of Ethiopia (NBE) to an autonomous watchdog.
For an industry long sheltered from foreign capital and overshadowed by banking, the draft proclamation promises change. Foreign capital would be allowed to hold up to 49pc of the stake in insurance firms, while the Ethiopian Insurance Regulatory Authority (EIRA) would oversee licensing, supervision and market conduct. The shift answers a demand insurers have pressed for years. The Ministry of Industry once oversaw the industry before being moved to the NBE, where executives argued that insurance rarely received the attention given to banks.
The bill would have the Authority operate under the Ministry of Finance, with a seven-member board that will include commissioners appointed by the Prime Minister and representatives from the NBE, the Ministry of Trade & Regional Integration (MoTRI), and the Ethiopian Capital Market Authority (ECMA). The NBE would retain control over statutory deposits, but the Agency would gain broader powers over insurers, reinsurers, brokers, and emerging digital products.
This would recast regulation around a market that remains small despite the rapid growth of the wider financial system. As of June 2025, financial sector assets had reached 5.6 trillion Br, accounting for 37.2pc of GDP. Yet, despite an annual growth of 40pc, insurance accounted for only 1.5pc of total financial assets. Insurance penetration was 0.3pc, far below the African average of 3.6pc and the global average of 6.5pc.
However, the liberalisation would not be open-ended. Strategic foreign investors may hold as much as 40pc equity, while non-strategic foreign nationals would be limited to seven percent. The draft proclamation also introduces a Takaful framework, allowing dedicated Sharia-compliant operators and permitting conventional insurers to offer Takaful products if they keep funds strictly segregated.
The bill outlines a resolution regime for troubled firms, allowing the Ministry of Finance to establish “bridge insurers” to preserve essential services while a failing firm is moved toward acquisition or liquidation. A regulatory sandbox will allow insurers and technology firms to test digital insurance products before seeking full licensing, a response to insurtech expansion and low automation in the sector.
The bill will also raise the bar for governance, requiring insurers to have independent directors and specialised risk management, compliance, and internal audit functions. Administrative penalties will back new capital adequacy standards. Firms will be compelled to maintain a written reinsurance strategy in proportion to their size and risk appetite, and to have it approved annually by their boards. The Agency would issue directives governing reinsurance, including standards meant to limit exposure to unregulated foreign entities.
The most delicate test may come in life insurance. Fourteen of the 18 firms serve the segment, but life insurance accounts for only five percent of total business. The bill requires life and general insurance operations to be separated into independent entities, a provision that has become one of its most contentious elements. Industry operators question whether standalone life insurers can survive in a shallow market, particularly when scale, expertise and technology are already in short supply.
Fikru Tsegaye of Ethio Re-Insurance Company called the bill a “monumental breakthrough” for an industry that has long sought independent oversight. According to him, appointments to the new authority should be merit-based and transparent, warning that the credibility of the transition would depend on the quality of professionals selected.
Fikru believes the formal definition of reinsurance and the introduction of brokers could transform the market. Until now, only Africa Re and Zep Re operated locally, but the draft proclamation will allow foreign reinsurers to establish a direct presence. He called for reciprocity, arguing that domestic firms should be allowed to open branches abroad.
"The reform may support long-term innovation, but could strain weak life insurers," Fikru told Fortune.
Asseged Geberemedhin, another insurance expert, described the impending legislation as "a turning point" for the industry. According to Asseged, aligning local practices with global standards would protect policyholders and improve Ethiopia’s credibility as it seeks deeper integration with the global financial system. He pointed out that 70pc of the population remains uninsured, saying agricultural and health coverage offer noteworthy opportunities, particularly through Takaful and foreign investment.
Low automation and shortages of technical expertise continue to make compliance with international standards such as IFRS 17 difficult. Market concentration remains high, with state-owned firm, the Ethiopian Insurance Corporation (EIC), holding a 33.9pc share of the general insurance segment.
PUBLISHED ON
May 04,2026 [ VOL
27 , NO
1357]
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