Challenges and Prospects of Life Insurance in Ethiopia

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Addis Ababa University


This study is intended in search for the challenges and prospects of life insurance in Ethiopia. Descriptive research design is used to identify the challenges and prospects of life insurance in Ethiopia. Quantitative and qualitative research approach and Survey method is used. Semi structured 5 lickert scale questionnaire and self administered interview were used as a data collection instrument. All insurance companies operating life business as of Dec 2017 and 87 professionals working for the selected companies were included in the survey. Descriptive statistics is used to analyze the data. Income, inflation and interest rate are found to be the economic challenges; awareness, education, urbanization, religion are demographic challenges. Weak strategic focus, weak awareness creation strategy , lack of professional in the field , inability to develop unique product ,and absence of local actuary are institutional challenges , whereas absence of independent regulatory organ, government restrictions on investment , restriction on foreign insurers entry ,weak contribution of academic institutions in cultivating insurance professionals , unfair competition in the industry, absence of integrated information or database are external challenges that are contributing for the weak performance of life insurance. Regarding the opportunities, emerging information technology, enforcement of insurance companies to customize their process using information technology, initiatives of the government in human development in the stream of insurance, the effort of Ethiopia to be a member of WTO, the increasing trend of middle income group, the increase in population and the untapped market of life insurance are the opportunities for the development of life insurance. There is a need of collaborative effort to increase the awareness of the public about life insurance, insurance companies should device clear strategy towards doing life insurance business, they have to develop suitable affordable and Varity of products for the public, the insurance regulator need to be organized independently and equipped with insurance professionals, The government , the insurance association and academic institutions should work together to establish Insurance academy to address the scarcity of insurance professionals. Information technology should be used to cater the cost of distributing insurance. Regulations affecting life insurance like investment restrictions, pension and social health insurance scheme, tax imposition on life insurance should be revisited by the government.


Research Project submitted to the School of Graduate Studies of Addis Ababa University in Partial Fulfillment of the requirements for the Degree of Master of Financial Services


Life Insurance, Life Insurance Penetration, challenge