Insurance executives say a tendency to focus on banking at the National Bank of Ethiopia (NBE) necessitates a new independent regulator if the industry is going to live up to its immense potential. The call comes as the government lays the groundwork for a separate body to govern insurers—a process industry insiders claim has been proceeding largely without their input.

A new regulatory agency is expected to be established, to oversee the insurance industry. So far, insurance industry has been managed by a directorate inside the National Bank of Ethiopia (NBE). However, insurance gurus have been arguing that the industry could not grow as much as its potential as well as compared to the banking industry, mainly because NBE gives more emphasis for banking industry than the insurance sector.

The process of separating insurance regulation from the central bank, has been underway and expected to be realized by June 2025, according to sources.

Among those calling for a split from the NBE is industry veteran Meseret Bezabih, chief executive officer (CEO) of Hibret Insurance.

She believes an independent regulator is crucial for growth in the Ethiopian insurance industry, which comprises 18 firms holding approximately 17 billion birr in capital at the end of 2022/23.

“Insurance is in a very nascent stage to date in Ethiopia, but the potential for growth is immense,” Meseret told The Reporter. “An independent regulatory agency that will focus on insurance is vital. So far, our operations, activities, and concerns are relegated to second place because the NBE appears to prioritize the banking sector.”

The decorated CEO says this has to change if Ethiopian insurers are to realize their ambitions.

Many in the industry believe that an independent regulator would allow it to receive the attention and support it needs for growth, help attract international investment, and advocate more actively on its behalf.

The Ethiopian insurance market is characterized by significant growth potential, particularly in life insurance, but struggles with high inflation, poverty, and a lack of qualified professionals.

Reports project the market will reach a gross written premium of nearly USD 4.7 billion in 2025 and continue growing. Insurers argue that playing second fiddle to banks will hamper this projected growth.

Their calls for an independent regulator are far from new, with Meseret explaining the demands stretch back several years. She described reports of a new bill in the pipeline to establish an insurance regulator a “welcome development.”

However, industry sources told The Reporter that the process of establishing the soon-to-be-announced regulator has not been as transparent as desirable.

“We have not been represented in the process,” one anonymous source said.

“We should have been there all along the process,” said another.

Before the 1970s, when insurers were placed under the purview of the NBE, regulating the industry, which at the time was largely under state ownership, was a mandate of the Ministry of Trade.

Today, the central bank oversees the young industry, which is dominated by the state-owned Ethiopian Insurance Corporation (EIC). In the first nine months of the current fiscal year, the EIC’s risk-bearing capacity exceeded 6.2 trillion birr, with a premium income of 7.6 billion birr and a record profit of over 1.2 billion birr before taxes.

Although private insurers have also exhibited strong growth over the past two decades, the industry has a long way to go in terms of reach and product diversity. There are also reports that the government is keen to allow foreign insurers to join the market.

Meseret welcomes the prospect.

“They would bring in much needed capital and expanded products,” she told The Reporter. “We have already outsourced a significant portion of our operations in the sense that we have deals with international reinsurers. We collect premiums, and we buy insurance from reinsurers. That is how we have been doing it for some time now. As such, it is less of a concern for us that foreign insurers would join the Ethiopian insurance scene. We will continue partnering with them.”

The government hopes liberalization will boost growth by increasing the flow of capital, widen the scope of insurance service, and bring in the knowledge and skills necessary to extricate the industry from market distortions and inefficiencies.

On the other hand, analysts fear opening up the industry to foreign competition would pose risks related to weak regulation and crowding out domestic firms.