Awash Insurance is gearing up to become the second firm to introduce a cellphone insurance policy. The 25-year old firm sent its proposal, along with a feasibility study, for approval to the National Bank of Ethiopia (NBE) last month.

A part of the general insurance lines of business, the policy will provide coverage for any damage to smartphones registered by Ethio telecom. The firm's executives expect it to generate an additional nine million Birr in yearly premiums.

Awash Insurance, which registered 210 million Br in profits last year, began the market study a year ago but faced difficulties due to the novelty of the idea.

Last year, the global mobile phone insurance market was valued at 27.2 billion dollars, with a predicted annual growth of 10pc, according to IMARC Group, a global market research company.

Nyala Insurance pioneered the cell phone insurance policy earlier this year, working with Ethio telecom to onboard clients, garnering 6,000 policyholders thus far.

The leader among private insurers with gross written premiums of over one billion Birr, Awash Insurance has yet to decide how much the policy will cost, disclosed Gudissa Legesse, chief executive officer (CEO).

"It'll be based on the type of cellphones," said Gudissa.

There are over 56 million mobile subscribers in Ethiopia. About 10 million are smartphones, with over two-thirds of the devices utilising the Android operating system. For Ebsa Mohammed, a consultant in the insurance industry, this might be a good opportunity for the cellphone insurance market to thrive. But he fears this would be undermined by the dominance of smuggled phones in the market.

"Lack of registration makes it difficult to identify their owners," said Ebsa.

Awash Insurance has partnered with Ethio telecom in targeting potential customers between 20 and 30 years of age.