Factors Affecting the Performance of insurance Companies in Ethiopia

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Date

2024-06-03

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A.AU

Abstract

This study aimed to identify the factors that impact the performance of insurance companies in Ethiopia. The researchers employed a causal research design using a mixed research approach, as quantitative data was required for the report's preparation. The study's target population was 18 general insurance companies in Ethiopia, but the researchers selected 10 experienced composite insurance companies with 10 years' worth of audited financial statements from 2014 to 2023. The secondary data was collected by closely reviewing financial statements and other published materials. The study utilized the Ordinary Least Square model to analyze the data through Stata version 14.2. The results demonstrated that explanatory variables incorporated in the model - such as retention ratio, combined ratio, company size, the tangibility of assets, inflation rate, GDP, and awareness of the society - affected Ethiopia's insurance companies' performance. However, premium growth and Leadership quality had no significant effect on the performance of insurance companies in Ethiopia. The study's findings provide insights into the performance of insurance companies in Ethiopia. Insurers must prioritize innovation and develop new products and services to meet evolving customer needs. This includes creating tailored insurance products for underserved demographic segments. Insurance companies should operate in a competitive environment, avoid price-cutting and risky investments, and implement robust underwriting and risk management practices to foster industry growth and economic development in Ethiopia.

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