Identification and Analysis of Determinant Factors for the Growth of Non–life Insurance Gross Written Premium in Ethiopian Insurance Industry, in the Case of some Selected Insurance Companies
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Date
2019-06
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A.A.U.
Abstract
Insurance is one of the major risks mitigating mechanism in modern economy. In Ethiopian
insurance industry the non-life insurance growth of gross written premium for the past 5 years
have been grown on the average of 17.5%. This is significantly above the economic growth of the
country. Though there is a rapid growth rate in the sector as compared to other countries,
insurance penetration rate and density is at infant and at the very low stage. For the year
2016/2017 Ethiopian insurance industry non life insurance premium penetration rate is below
1% and insurance density is birr 52.00. The objective of this study is to identify and analyze the
factors that affect the growth of non life insurance gross written premium. In order to achieve
the objective both primary and secondary data were used. Primary data collected by means of
structured questionnaires which were distributed to employees of some selected insurance
companies which were operated over 20 years. They were asked to rate their opinion according
to a 5-point Likert scale ranging from strongly disagree to strongly agree levels. And Secondary
data were collected from the selected seven insurance companies of Ethiopia and from National
bank of Ethiopia. The result indicated that there was a statistically strong correlation between
the growth of non life insurance gross written premium and GDP agriculture, GDP service and
GDP industry. And there was strong and statistically significant positive correlation between
non life insurance gross written premium and number of branches. Furthermore, the result
showed that predictor variables, variables like, claims expense, operating expense, underwriting
operation, Intermediaries, GDP services, GDP agriculture, No. of branches, capital, and new
product and NBE regulation made a statistically significant prediction in influencing/predicting
the dependent variable, non life insurance GWP. The results are presented using tables and
figures. Therefore, the finding of this thesis recommends that Government need to sustain
economic growth, insurance companies need to increase capital and expand branches (outlets).
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Keywords
Economic Growth, Insurance, Non life Gross Written Premium