April 20 , 2019
By Asseged G. Medhin ( Asseged Gebremedhin is the deputy CEO of Global Insurance. )
Asseged G. Medhin is the deputy CEO of operations at the National Insurance Company of Ethiopia (NICE). He can be reached at firstname.lastname@example.org.
There is currently a debate among politicians and economists about how much government regulation is necessary for a fast-growing economy such as Ethiopia's, and which of the sectors in the economy should be deregulated firmly and why.
Those who want less regulation argue that if one removes government restrictions, the free market will force businesses to protect consumers, provide superior products or services and create affordable prices for everyone. They believe that the government is inefficient and creates nothing but a bureaucracy that increases the cost of doing business for everyone.
Those who argue that government regulations are necessary to protect consumers, the environment and the general public claim that corporations are not looking out for the public's interest and that it is precisely for this reason regulations are required.
This is a debate that can directly apply to the financial sector, which is currently saddled with thin profitability, incompetence and fear of competition in the international arena. The insurance industry is the most infant in this sector and is currently trying to juggle between unethical practices in one hand and lack of technology, proper competition and dynamism on the other.
Players in the industry - regulatory bodies, insurers’ associations and experts - want to see both their endeavour and the industry itself become internationalised. Nonetheless, a deaf ear has been turned to the challenges of the sector within the last decades. It now remains in the doldrums of unethical competition, which would have been addressed had it been for fair, transparent and an orderly market place that benefits existing and potential customers.
An operator of a market generally can be expected to satisfy its obligation to do all things necessary, to the extent that it is reasonably practicable to do as such. But this can only be if the rules governing the operator of the market are clearly set out.
Recent examples of these, pushing the industry into not playing by the rules, are the introduction of different customs laws that demand insurers pick up the cost of time-barred debts. Most insurers also have strategic alliances with companies they are currently invested in or vice versa.
If investors processing loans are urged to buy insurance from the insurance companies the lender is in a financial relationship with, it will lead to unethical practices, problems that could be addressed through a strong association and an independent supervisory body for the insurance industry.
Insurance companies, especially through the association, are expected to challenge these and other emerging political, legal and governmental regulatory risks through their formal conventions, intensive debates and contribute advisory services to regulatory bodies and policyholders.
They should raise funds to defend professionalism and the right of the insured to the extent of his or her pursuit of freedom to use insurance services without being affected by the unethical urges of financial institutions.
Supporting and enhancing the free market economy creates a space for policyholders to choose insurers and bolsters bargaining power. This was what the initial opening up of the sector was expected to accomplish, but it did not despite the growth in the number of insurers.
There is currently no dynamic approach in terms of product development, technology, fundamental changes in business processes and healthy competition that does not collude with the interests of banks that are invested in the firms. In the last two decades, there should have been a diversification of the industry, especially in the introduction of financial holding companies, fintech and advanced securities and stock exchange markets.
Insurance companies should stand together in realising a regulatory shift toward financial convergence and mapping out blurred boundaries to defend ethical business and professionalism. Financial supervision has revealed weaknesses in dealing with financial convergence, and the autonomy of regulatory bodies remains inefficient so long as it is chained to political ideologies.
Insurance companies should urge the formation of an independent regulatory body from the National Bank of Ethiopia, which can focus solely on insurance and the need for them to focus on supporting the economy. An independent insurance supervisory board, constituting relevant stakeholders dedicated to professionalism, business ethics, growth and innovative service, can as well go a long way.
We have reached an age where customers challenge the capability of business companies to store their transactions in the “cloud,” let alone on quality service to take more money from their account.
They need a sophisticated service and more benefits at a low price. When they ask for insurance policies, they need a wider cover, few deductions, exceptions and exclusions and more benefits. Insurers can at the same time reduce their claims and marketing costs and better their profits to distribute higher dividends to shareholders and a better benefits package for employees to attract competent professionals.
They need to defend strategic marketing plans that will allow them to increase their market share year after year. This requires business leaders to shift their strategy year to year and should be more ethical and professional than indulging in unethical business decisions.
The Ethiopian insurance sector and every participant should change their focus to dynamism. It is at this juncture we need to seek a different set up at the regulatory and the insurers' association to defend the interest of policyholders and address unethical practices.
PUBLISHED ON Apr 20,2019 [ VOL 20 , NO 990]
Fortune News | Dec 07,2019
Exclusive Interviews | Jan 05,2020
Fortune News | May 16,2020
Agenda | Mar 20,2021
Fortune News | Sep 24,2018
Viewpoints | Apr 30,2021
Fortune News | Feb 16,2019
Fortune News | Jul 27,2019
Editorial | Jan 04,2020
Commentaries | Dec 29,2018
Fortune News | 37677 Views | Jul 18,2020
Photo Gallery | 16713 Views | May 06,2019
Fortune News | 16657 Views | Oct 12,2019
Photo Gallery | 15800 Views | Mar 16,2019
Commentaries | May 08,2021
Life Matters | May 08,2021
My Opinion | May 08,2021
Sunday with Eden | May 08,2021
Agenda | May 08,2021
Editorial | May 08,2021
May 8 , 2021 . By HAWI DADHI and NEJAT AHMED
A 50-year old mother, Aster Amsalu, and her son, 26, began their search for an electo...
March 27 , 2021 . By BAMLAK FIKADU
An application developer who has recently taken up hiking to get some exercise, Migno...
February 13 , 2021 . By TADESSE TSEGAYE
In Arada, I stopped over by a hotel in front of Cinema Empire. I sat alone inside wit...
January 30 , 2021 . By FASIKA TADESSE
The Council of Ministers approved a regulation that will establish the Liability &...
The 2021 World Press Freedom Index, by Reporters Without Borders (RSB), ranks Ethiopi...
Leaders of the National Election Board are in a charm offensive mood, of a sort. Last week, they organised a rare tour for members of the me...
When the country’s most senior diplomats and envoys return back to their posts after two-week debriefings, they leave behind a point or tw...
May 8 , 2021
Diplomacy is not the forte of Ethiopia’s officials. They are often too absorbed in...
April 30 , 2021
Nothing can better describe Ethiopia's state of affairs today than the French idiom:...
April 24 , 2021
There were no surprises when the National Bank of Ethiopia (NBE) decided two weeks ag...
April 17 , 2021
There is not a facet of life in Ethiopia today that is not convulsed by the moral cri...
PM Abiy Ahmed (PhD) at a Gala Dinner Called for the Awarding of the Félix Houphouët-Boigny Peace Prize
May 6 , 2019
When Ferruccio Lamborghini, a wealthy farmer, met Enzo Ferrari, he commented on the cars' heavy clutch. Ferarri then told the farmer that a...
May 8 , 2021
Bogged down by political instability, logistical constraints, and disputes with regio...
May 8 , 2021 . By BAMLAK FIKADU
Appeals by hotel owners and tour operators for the extension of repayments of loans t...
May 8 , 2021 . By NEJAT AHMED
The embattled Hiber Sugar Share Company eyes new investment opportunities in the agri...
May 8 , 2021 . By HAWI DADHI
Two international consultants are vying to be hired as a transaction advisor for the...
Or see contact page