Zufan Abebe (right), chief executive officer (CEO) of Nib Insurance, and Charlotte Ronje, CEO and co-founder of Jamii One, at the signing ceremony held at Magnolia Hotel on March 10, 2022.

Nib Insurance executives have introduced a group life insurance plan offering affordable coverage to members of an edir, a traditional voluntary association where members pool funds to cover funeral costs. The micro-life scheme is the second insurance product Nib has introduced in recent months to bolster revenues from the long-term insurance business.

The insurer has signed a contract with Jamii One, a Danish tech firm, to supply a digital savings platform that edir members can use to pay daily premiums of up to two Birr each for a group life insurance policy. Incorporated in 2002 with equity raised from 658 shareholders, Nib netted 148.2 million Br in profits last year. It launched the group micro-life insurance scheme at a ceremony held last week at Magnolia Hotel on Cape Verde Street (between Atlas Hotel and Bole Road).

Voluntary associations with more than 35 members are eligible for the scheme. Nib executives say they expect to collect nine million Birr in premiums over the first year, registering 80,000 people. Though premium rates can vary, the company offers settlements from 100,000 to 200,000 Br. Relatives of policyholders cannot claim compensation if death occurs within 30 days after registration.

The digital savings platform can be used to register and track financial transactions. It was developed in 2019 to enhance financial inclusion and facilitate data-driven financial products in Sub-Saharan Africa. According to the Danish company active in Ethiopia and Kenya, it is a digital tool designed specifically for saving in social institutions such as Edir.

Fifty NGOs and 500 saving associations have been using the Jamii.one platform. Incorporated in 2008, the firm also developed the Jamiipay group app. It has availed the app to Nib's potential customers free of charge, according to Tigist Bezu, project coordinator for Jamii One Ethiopia.

Last year, the tech startup collaborated with Metemamen Microfinance Institution to disburse loans to 150 traders, amounting to 20,000 dollars.

It was involved in Inclusive Digital Economies Action in Ethiopia, financed by United Nations Capital Development Fund. It provided its digital tool to 500 saving groups and 10 voluntary associations in two refugee camps.

The company has signed a service provision agreement with Nib.

“We'll be paid for the quality data we provide,” said Tigist.

The app is well-suited for group saving as one member can register peers in the voluntary association, saving time and money as well as eliminating the need for each member to own a smartphone, according to Tigist. Edirs are required to pay the annual premium upfront.

The product seems to have received a warm welcome from its target audience.

Abera Tessema is a deputy head of an edir in Bole District with 318 members, each paying a 30 Br monthly membership fee. His association is eligible for Nib's scheme, and Abera attended the launching in hopes of learning about group life insurance and convincing members of the association to join.

“Although the scheme is beneficial, coming up with a death certificate to claim compensation in a short time can be a difficult task,” he said.

Ejigayehu Tadesse, who serves as head of finance for an all-women edir in Adama, 100Km southeast of Addis Abeba, was also in attendance. Her association offers members 9,500 Br as compensation.

“The compensation is much higher than the amount paid by most edirs,” she said.

The product is part of Nib Insurance's efforts to explore options to capitalise on the untapped long-term insurance business. Non-life insurance policies have long dominated the industry, accounting for over 90pc of the 13.8 billion Br in gross written premiums last year. Though life insurance has grown markedly over the past couple of years - premiums rose by 65pc to nearly one billion Birr last year - it remains relatively novel.

Insurance firms try to deploy digital platforms to push the edge.

Awash and Nyala insurance firms began offering mobile phone insurance coverage. The policy provides coverage for any damage to smartphones registered by Ethio telecom. With gross written premiums of over one billion Birr, Awash Insurance had launched takaful, a Shariah-compliant insurance product, in 2021. Incorporated in 1995, Nyala Insurance is in the final stages of launching its own takaful services.

Industry leader and state-owned giant Ethiopian Insurance Corporation (EIC) became the first to introduce a clinical-trial insurance policy last year. Private insurers have since applied for permits to offer the product to their clients.

Nib Insurance is no exception in the industry. Its general insurance business accounted for 89pc of the 568 million Br the firm registered in premiums last year.

Ebsa Mohammed, a consultant in the insurance industry, observed the recent move by Nib could have a positive impact on the undeveloped long-term insurance business. However, he warns that the risk involved with such insurance policies is high.

“The pandemic has increased mortality rates in many countries,” he said.

Last year, insurance firms paid out 263 million Br in claims for long-term insurance policies. The industry claims ratio for the life insurance class of business stood at 56pc.

Over the first nine months of 2021, the global life insurance industry paid out 5.5 billion dollars in claims, 57pc higher than the preceding year, according to the Global Federation of Insurance Associations.

Insurers are trying to diversify their portfolios to come out on top in an industry characterised by cut-throat price competition and hampered by the low penetration of insurance policies.

Last December, Nib Insurance partnered with Nib Bank to roll out an insurance premium financing facility where the Bank pays annual premiums on behalf of taxi owners and public transport vehicles unable to afford a lump sum for motor and life insurance policies.

The insurer targeted to collect 20 million Br in premiums annually from the scheme.

PUBLISHED ON Mar 12,2022 [ VOL 22 , NO 1141]

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