Regulators have thrust the insurance industry into a defining moment, issuing a sweeping directive that raises the eligibility bar for board directors, chief executive officers and senior executive officers. It is one of the strongest recent pushes for long-term corporate governance in a sector that has long sought regulatory independence.

The regulation aligns insurance with governance and compliance standards already seen in banking, and it arrives as the industry’s economic role weakens. Recent financial reports show the industry's contribution to GDP fell by 0.1 percentage point to 1.5pc in 2025. Market concentration remains below one percent, far below the global average of six percent, exposing how little financial protection exists for individuals and businesses against risk.

The directive imposes a tougher standard for leadership, raising the minimum experience requirement for a chief executive officer from 10 years to 12 years. Candidates are required to demonstrate that they have served at the senior executive director level for at least five years. Senior executive officers now need a minimum of four years of experience and formal regulatory approval. That approval process is capped at six months, and failure to meet the deadline carries a penalty of 10,000 Br.

What regulators at the National Bank of Ethiopia (NBE) frame as a governance upgrade, many in the industry see as a sharp narrowing of an already shallow succession pipeline.

Industry insiders warn that the succession pool is alarmingly depleted because education, training, and skills have not kept pace with the industry’s needs. Executives fear the new thresholds will leave insurance firms with fewer internal options, making it difficult for many rising professionals to be promoted from within.

An insurance executive, speaking on condition of anonymity, cautioned that the rules will decrease the talent pool and leave firms with only one possible successor each. He argued that young professionals are being pushed away from advancement, "diminishing the morale of work."

"The directive is not grounded in research but reflects the regulators’ perspective while overlooking fields such as ICT and marketing within management structures," he told Fortune. "This doesn't go with the liberalisation policy of the government. It's walking backwards."

Officials from the National Bank were not responsive to queries from Fortune, while leaders of the Ethiopian Insurance Association were not available for comment.

The directive also reaches into the boardroom, requiring directors to be at least 30 years old. Independent directors, long familiar in banking, are now required in insurance, and they may be non-Ethiopians if they meet the qualifications. Existing boards are exempt until their next selection cycle, but some firms are already encountering contention.

The National Bank has also shortened the life of temporary leadership. An acting CEO or senior executive officer can now serve for only six months, except for the CEO position, which has a nine-month cap before a permanent appointment can be made. Yet this, too, has sharpened debate over what kind of leadership the industry should value.

"The regulator favours operational experience over broader leadership skills, even as insurers increasingly depend on capacities beyond traditional insurance functions," said the Chief Executive’s Officer, who asked not to be named.

The industry comprises 19 companies, with four non-life insurers, 14 firms operating in life and non-life segments, and one reinsurer. A fully fledged Sharia-compliant insurance company is expected to make its debut in an industry whose gross written premiums reached 41.4 billion in the 2024/25 financial year, a near-50pc leap from the previous two years. The acceleration has been driven by a cocktail of aggressive asset revaluations and a nascent shift in corporate risk appetite.