Despite starting its insurance industry early, Ethiopia currently lags in insurance penetration.
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Equb and Idir functioning as traditional social safeguards, Ethiopia didn’t have its modern insurance industry until 1905. A partnership between the British-owned Bank of Egypt and Menelik II birthed the Bank of Abyssinia, which started providing marine and fire insurance. After multiple foreign insurers joined the market, the first Ethiopian insurance company, Imperial Insurance Company, was established in 1951. Now, we have 18 companies in operation. 1
Even after being in the market for over half a century, the insurance penetration in Ethiopia is less than 1%. 70% of which is motor insurance, leaving the sector strained by the rising inflation and stringent competition. As of 2025, fewer than 400,000 people in Ethiopia hold life insurance. Most of these were compelled by the nature of their employment. For a country listed as one of the ten least stable countries in Africa, its people don’t seem to plan to do anything much more than contribute to their Idirs, with a pay of up to 5000 birr. 2 It’s ironic that the safest countries have the biggest insurance industries while those who actually need it don’t.
Insurance isn’t all boring
In other markets, Insurance is huge and interesting. People get anything of value to them covered. Football star Cristiano Ronaldo insured his legs for $144 million, while Maria Carey had her vocal chords and legs covered for $70 million, and Gordon Ramsay’s taste buds for $10 million. The list is long and wild. The cricket player, Merv Hughes, had the media buzz taking out insurance on his notable walrus moustache for $370,000. There is prize indemnity insurance where hosts offer lavish awards for an event. They are not ridiculous; they have got insurance on it. This is business. Globally, the industry is valued at a whopping $7 trillion, ranked 7th.
Some take it to extremes, underlining the risk of supernatural attack on their lives. It’s called SpookSafe insurance and is very expensive. Covering for any damage caused by paranormal activities, thousands are paying for it. Attack from ghosts, torture by spirits or abduction by aliens, people take out insurance on any danger they can imagine. Businesses also get coverage for losses incurred as a result of such complaints from customers. Call it መጋኛ ቢመታኝ ለሚደርስብኝ ጉዳት insurance, basically. Whichever you call them, paranoid or prudent, it seems their families have backups for times of trouble. [3]
It’s troubled here- anyone to the rescue?
The underdeveloped Ethiopian insurance scene has a lot to deal with. Poor policy structures, a lack of skilled professionals, technological obstruction, and public ignorance of its importance have hindered the sector. There is also the problem of diversification, with financial coverage being just rudimentary and health insurance among the lowest in the world. There it remains with archaic systems and the rising threat of foreign companies joining the market.
By mid-August, Sumitomo Corporation, a major Safaricom Telecommunications Ethiopia Plc investor, secured a 10-year political risk insurance. The policy covers breach of contract, expropriation, and currency inconvertibility. It was provided by cooperation between the pan-African insurer, ATIDI and a Japanese partner, NEXI. Amidst the growing global involvement in the economy, the hard-pressed local players don’t look primed to stand the competition, let alone thrive. [4][5] [8]
A couple of new companies are devising to capitalize on the huge gap, due to launch by the end of 2025. Aimed at offering lower premiums and quality service, the potential disruptors backed by Awach SACCO and a second with Droga Pharma and Droga SACCO are clearing their path. However, NBE’s paid up capital requirement, ETB 400 millions for general insurance and ETB 100 millions for life and health insurers, is far from attained. This will tighten the screw on the new entrants as they try to gain a foothold while pushing for the capital minimum by 2027. [9] Regulatory structures might add a challenge to the underperforming sector.
One auspicious move was in the predominantly uninsured sector, agriculture. Despite supporting over 80% of the economy, structured insurance was missing in the area. Crop yield could flip one year, leaving farmers and their families suffering the consequences, even to starvation. In mid-2025, five Ethiopian insurers, in partnership with Pula Advisors, formed a consortium which aims to cover 3 million farmers in 2026 alone for climate-related risks. The platform will leverage a digital tool, MAVUNO, for AI-powered real-time data collection and PIE for intelligent product design and policy management. It is going to back millions of smallholder farmers after crop failures. [7]
Aside from all other threats to life and livelihood, Ethiopian news of floods, earthquakes, and landslides has recently lingered over the headlines. Will that be a new area of venture for insurers?
