Africa Insurance Company to introduce mobile insurance (Ethiopia)


By Muluken Yewondwossen | Capital Ethiopia October 19, 2017

Africa Insurance Company announced that it is going to introduce mobile insurance service.

While the insurance industry is battling tough competition that led to low premium price, the company announced that it has accumulated significant revenue in the past fiscal year.

Kiros Jiranie, President of Africa Insurance, told Capital that the insurance firm is working with the Indian IT company to modernize its current IT system

He said that the company has to follow the latest technology to expand the insurance business and branch out to every corner of the country.

“Currently the insurance sector is transacting online services, therefore, would have to implement technological upgrade,” he added.

At the current stage the client and the insurance companies are conducting their businesses up front. The claim collecting process follows the same procedure.

When the new system becomes applicable, the cost of attracting customers or of claim evaluation will reduce significantly.

Fast service is also another benefit clients will get from the modern scheme, according to the head of Africa Insurance.

“On the mobile insurance technology, clients could buy our products from anywhere as per the procedures. The same applies for collecting claims ,” the president said.

“We are currently using the automation, PREMIA Insurance Software Solutions, which will be upgraded by the IT Company that we have been working with,” he added.

Currently the insurance company has sealed the deal with the Indian company 3i Infotech to upgrade the PREMIA software to expand its business on a modern platform.

“We have agreed with the Indian company that automated our insurance company system in the past, to upgrade the software to a mobile compatible system,” Kiros said.

In the past fiscal year, Africa Insurance has estimated a seven percent market share from higher premium registration, excluding the state owned insurer. The premium collection rate has registered a significant growth compared to the 2015/16 fiscal year.

“In the fiscal year that just ended, the total premium Africa Insurance collected has grown by 32 percent, compared to the preceding year,” Kiros added.

Generally in the past fiscal year the insurance firm, which is one of the oldest private insurers since the market opened to the private sector about quarter of a century ago, has collected over half a billion birr from premium.

In the 2016/17 fiscal year the insurance firm has sold 494 million birr with policy on the general insurance sector, which was 374 million birr.

The life insurance sector, calculated every two years, stood at 32 million birr – similar to past performance.

The insurance sector has earned profit from its technological investment comparable to its other business investments including premium and claim. In the past fiscal year the insurance firm has settled 314 million birr claim for general insurance, with the motor sector responsible for 90 percent of the total. The collected claim has grown by close to 59 million birr from the preceding years.

In the past fiscal year, the company premium collection registered skyrocket growth even if the claim rate showed significant growth.

A year ago Africa Insurance has settled 253 million birr claim for its clients.

Kiros said that the claim particularly from the motor sector is affecting the insurance industry.

The market competition in the insurance industry, mainly in auto insurance, has forced the companies to reduce their premium rate, which directly affects the industry and reflects on the loss ratio.

The Association of Ethiopian Insurers that included all insurance companies in the country assigned the Kenyan based Actuarial Services (East Africa) Limited to present solution for the problem that challenges the sector.

Kiros said that the National Bank of Ethiopia (NBE) also has concerns since this problem affects not only the companies, but also the general public.

The consultancy firm has recently presented its draft solution for the problem. Kirso said that the actuary firm has submitted its draft; while the implementation will depend on the final review of the members and the approval of the supervisory body, NBE.

“Meanwhile there is no detailed study comparing the premium percentage amount when the state owned Ethiopian Insurance Corporation solely operated about two decades ago and now with the involvement of the private sector, the insurer said. “Currently the premium percentage has declined significantly by about 60 percent compared to the percentage 20 years ago. If this decline is compared with other neighboring countries, it is very low,” the President said.

On the motor sector Kenyan insurers’ premium rate is not less than three percent, while the Ethiopian market has declined below one percent.

“The solution will be seen in the future when the final result comes out,” the President said.

“The current stage clients have to focus on reliability of the insurers than the price of the premium,” he added.

He said that the insurance revenue is currently concentrated on the capital city and has to expand to the other regions. From the total premium that insurance industry collected 70 percent comes from Addis Ababa.

Africa Insurance has stated that in the time its revenue from premium has grown significantly, its profit is very low compared with the preceding year. However, from investment and bank it secured 35million birr revenue. The insurance firm is expanding its branches as per its five years plan. It has targeted to expand its branches by five locations every year. Currently it has reached a total of 30 operating branches. Africa Insurance has its building at Bisrate Gabriel area that consumed 200 million birr in rent. Construction of the headquarters located at Bole area has reached 70 percent completion. “We expect the building to be fully finalized before January,” Kiros added.

The building that is expected to have cost 140 million birr is 12 storey high, and has three basements for parking.

The company was established two decades ago with 30 million birr capital of which 15 million birr is paid up capital that expanded the firm’s asset to 863 million birr. A year ago the insurance company’s asset was 766 million birr.

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