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.