Ethiopian Business Review

Fikru Tsegaye

Fikru Tsegaye

Fikru Tsegaye holds MBA in Marketing and MA in Human Resource and Organizational Dev’t. He is currently working at Ethiopian Insurance Corporation as Marketing and Strategic Management Team Leader. He can be reached at fikru.tsegaye@yahoo.com

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For most, it was imprecise how Ethiopian insurers would manage their prices devoid of actuaries. As most insurers know, premium has a more significant impact on the bottom-line than any other item on a company’s income statement. For the average insurance company, a 1Pct drop in price can slash operating profits by up to 15 - 20Pct if not more. While there is no single recipe to determine insurance pricing, professionals commonly follow a general sequence of steps for developing the pricing of insurance premium. The insurance premium collected should at least be sufficient to fund expected claim costs and administrative costs and provide an expected profit to compensate for the cost of capital. Scholars argue that, cascaded from corporate strategy, the firm's pricing objectives must be identified in order to determine optimal pricing.

Ethiopia’s current economic progress, as well as its future development prospects, could open the door to more business opportunities and challenges. With that comes the increased possibility of risk and warrants the emergence of insurance and reinsurance businesses in Ethiopia. Herein lies the question: shall Ethiopia shoulder all the risk exposure or share it with other continental or global risk carriers? The topic of cultivating proficient insurers and reinsurers begins here. 

The Ethiopian Health Insurance Agency, a new establishment designed to change the nation’s health insurance platform, is almost ready to launch the first ever health insurance scheme in the country. Its goal is to escalate the health service coverage in order to speed up sustainable health care financing that augments equitable admittance to enhanced health services by means of cross-subsidization.