Fikru Tsegaye Wordofa – Ethiopian Business Review

An Opportunity for a New Insurance Solution?

Earthquakes, often regarded through the lens of traditions and beliefs as a divine punishment, rank among the most frightening natural disasters due to their destruction capacity and inherently unpredictable nature.

Geoscientists emphasize that Ethiopia’s diverse regions experience varying levels of seismic activity due to their location along the African Great Rift Valley region and tectonic plates. This underscores the urgent need for earthquake preparedness, as earthquakes have been a longstanding reality in Ethiopia, with numerous perceptible tremors occurring.

Reforming Leadership Criteria in Ethiopia’s Insurance Sector

This analysis is penned sincerely to support the Ethiopian insurance sector, particularly in light of the existing deficiencies and the absence of a comprehensive policy and legislative framework for leadership development. This framework is essential for establishing and enforcing appropriate, non-discriminatory fit and proper criteria for selecting and appointing key personnel in leadership roles, even when compared to standards set by other financial institutions in Ethiopia.

Ethiopia’s ambitious Green Legacy Initiative aims to transform the nation into a green paradise. However, the looming threat of climate change and natural disasters casts a shadow over this vision. Forest insurance emerges as a crucial safety net. This commentary by insurance insider Fikru Tsegaye Wordofa delves into why Ethiopia urgently needs this financial safeguard. The article shows how forest insurance can protect the country’s invaluable green assets, bolster the economy, and contribute to a sustainable future.

Globally, Takaful – a Sharia-adherent insurance scheme – is registering unparalleled development. The product is being offered in the form of either family or general Takaful to cater to the need for protection and cooperation at times of risk. Takaful insurance became effective in Ethiopia on the 15th day of June 2020 with the issuance of the National Bank of Ethiopia’s (NBE) Directive No. STB/1/2020, a Directive to license a takaful operator or a takaful window operator. Conversely, the product is at the early introduction and premature stage, while a massive potential exists. Records in Ethiopia demonstrate that the expanding Muslim population is anticipated to be a driving force for the takaful market. However, the question lies with the availability of innovative and value-adding products apart from simply naming the existing conventional insurance products under the guise of Islamic insurance.

The Key Line of Defense Against Mounting Cyber Threats in Ethiopia

Cybercrime has been on the rise in Ethiopia and elsewhere in the world causing substantial financial losses, business interruptions, and impairment to the reputation of endangered companies. Official reports from Information Network Security Agency (INSA) officials indicated that Ethiopia has recorded more than 2,800 cyber-attack attempts during the year 2021, cataloging an alarming increase in such attacks, which is more than double the 1,080 similar cyber-attack attempts recorded during the previous year. Observing the cyber risks affecting Ethiopia, the agency cautioned companies to reinforce their cyber security systems to safeguard against imminent challenges. We have also heard that cyber attacks have been increasing in the country principally in association with the second filling of the Grand Ethiopian Renaissance Dam (GERD).

Independent Regulatory Authority:
The What and Why
The necessity for regulation and supervision of the insurance sector is deeply rooted in the legal, sociological, and economic importance of insurance. Regulators are deemed as reactors, makers, and breakers of the insurance industry since they control and or facilitate the operations of insurers and related parties from their establishment up to their liquidation. This makes them highly responsible for the success or failure of the insurance market.

Despite academic recommendations of integrated water management and sustainable development among countries sharing trans boundary rivers to achieve social equity, economic growth, environmental and ecological protection, there is always misunderstanding and sometimes conflict among upper and lower riparian countries. There have been such problems in the Nile basin in Africa, Tigris and Euphrates in the Middle East, Aral Sea basin in Central Asia, Parana basin in South America and Ganges basin in Asia. The fact remains that a uniform mechanism/convention to manage trans boundary water resources does not exist. Some water related customary and general principles of international law have, however, become the basis of major international conventions, treaties and agreements for trans boundary water resources cooperative management.

Calls for Innovative Insurance Products

The novel coronavirus (COVID-19) was recounted to have arisen from Wuhan in China towards the end of December 2019, and the first case has been reported in Ethiopia by the Federal Ministry of Health effective from 13 March 2020. In a bid to curtail the spread of the virus, various preventive measures have been put in place by the government and insurers have also introduced some insurance products. The measures taken by the Government, among others, include declaring a state of emergency and working on urging the public to wash hands frequently, maintain social distancing, place reliance on reliable and up-to-date information about the pandemic, wear masks and ensure isolation after infection or when in suspicion of infection. In addition to social and health-related measures, the State-Owned Insurer has pledged to place life insurance for health professionals in direct contact with COVID-19 patients.

We have shockingly witnessed Ethiopian artists seeking donations and financial support to cover emergencies such as medical or funeral expenses time and again. Most of them are either unable or unprepared to cover such costs which in turn have led many of them to untimely death, and public disgrace. If the art community could plan and negotiate affordable insurance coverage, they can avoid both ill-fated consequences. In a country of rich art collections and profound artists, underwriting suitable insurance for art and artists could indeed be in high demand.

Considering the existing reality in the Ethiopian finance sector, one may propose that an excessive short-term focus by some boards of directors, corporate leaders and shareholders combined with insufficient regard for long-term strategy can cause an imbalance in the companies’ long term and sustainable growth. Particularly, shareholders represented by a board of directors typically affect company operations and decisions differently than other stakeholders concerned with the business.

Ethiopia’s Seismic Threat

An Opportunity for a New Insurance Solution?

Breaking Down Barriers

Reforming Leadership Criteria in Ethiopia’s Insurance Sector

Forest Insurance Ethiopia’s Green Shield

Rekindling the Growth of Islamic Insurance

Cyber Security Insurance

The need for an Independent Insurance Regulatory and Development Authority of Ethiopia (IRDAE)

The principles of international water law and the realities surrounding the GERD

COVID-19 Pandemic

Calls for Innovative Insurance Products

Insurance for Art

Short-termism, Sustainability of Financial Institutions