Ethiopia's recently unveiled draft "Insurance Proclamation" mandates the establishment of the Ethiopian Insurance Regulatory Authority (EIRA). The new regulator will take over from the National Bank of Ethiopia (NBE), which has regulated the insurance industry since 1976.
Once ratified, the new authority is expected to have 100% operational autonomy, reporting directly to the Ministry of Finance. This step is viewed as a “historic milestone” and a vital change ahead of opening the sector to foreign competition, reported Capital Ethiopia.
The board will consist of seven members led by ex officio government officials. These include the Governor of the National Bank, a representative from the Ministry of Trade & Regional Integration, the Commissioner of the Authority, and the Director-General of the Ethiopian Capital Markets Authority. The remaining seats are slated for independent members appointed directly by the Prime Minister.
While industry players welcome the change to an independent regulator, they are concerned that the board composition would comprise exclusively of government officials, lacking private-sector representation.
The proposed law represents the most substantial structural change in the sector in four decades, including allowing foreign participation. Currently, there are 19 locally incorporated insurance companies in Ethiopia.
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