First exclusive life insurance company founded

By Muluken Yewondwossen (capital)
The first exclusive life insurance company, Ethio-Life Insurance was founded on February 9, 2008 with a paid up capital of over Br 6 million. It has 130 shareholders.
The legal capital requirement to establish an insurance company is Br 4 million and the company is due to start operations with a capital exceeding the minimum requirement.
Ethio-Life Insurance Company will be a specialized long term insurance company engaging in life insurance, health insurance and annuity cover it was announced at the founding meeting held at the Ghion Hotel.
One of the business motives for the promoters to establish an exclusive life insurance company, after 34 years of hiatus, was noted as the fact that the potential for long term insurance in Ethiopia is untapped. Low penetration of long term insurance was explained more by low intensity of business promotion and awareness creation than by cultural barriers and low disposable income.
The promoters believe that there will be an increasing demand and, hence, steady growth in returns. Currently, the contribution of life insurance is a mere slice of the total insurance sales in the country, which is 5 to 6 percent.
According to the company’s release document the new company plans to change this state of affairs around and undertake long term insurance as a self-sustaining and independent business entity. Together with other actors in the industry, Ethio-Life will do its best to promote long term insurance and hopes to upgrade the share of long term insurance in the country to 15 percent in five years time.
The company believes that life insurance appeals to all members of the society irrespective of economic or social status. As the experiences of other countries show, the demand for life insurance is not fully correlated with the per capita income of citizens, according to the company realized document.
The document said that in countries such as Costa Rica and India, the per capita spending on long term insurance is Birr 63 and Birr 168 respectively as opposed to Birr 0.5 in Ethiopia. The penetration of long term insurance in these countries is 126 and 336 time larger than that in Ethiopia respectively. The shareholders, therefore, rallied around the strong theme that long term insurance will have a niche in the shipping basket of the families and would gradually be introduced to the homes of millions.
Essentially, Ethio-life commits itself to tailoring life insurance products to society’s need by introducing suitable insurance products.
The noticeable changes in the structure of our society such as ‘extended family’ gradually becoming ‘less extended’ and the force of the market increasingly putting pressure on families to be economically independent and plan for the future are some of the factors that the new company considers as opportunities in the years ahead. The global and national business trend, expansion of private employments and growing parental concern for children are also equally propitious developments conducive to the business.
The founding meeting has elected a board of directors comprising seven members including three body corporate: Teshome Beyene, Yoseph Endeshaw, Zikre Negatu, Ayate S.C, Ethiopia Machinery Lease plc, Abate Digafe and Ethiopian Air lines Employee’s Savings and Credit Association. The members were praised to have a strong and diversified business experience and credential.
The company plans to start operations in three months and would soon apply to the regulatory authority for a license.