Ethiopian insurance companies have until the 31st of December 2013 to collect outstanding premiums or set aside a 100 percent provision for premium debts according to a draft directive distributed by the National Bank.
The National Bank sent out the directive known as “Information Exchange Scheme on Outstanding Premium”to insurance companies seeking their feedback by the end of this week it was learned.The directive intends to enable insurance companies to share creditor information so that clients who owe an insurance company credit will be denied coverage elsewhere with the exception of third party vehicular insurance it was learned. Insurance companies had asked the National Bank to facilitate for sharing credit information earlier this month after being required to disclose a clear plan for collecting outstanding credit estimated to be 1.7 billion birr in unpaid premiums. It is to be remembered that the National Bank prohibited selling premiums on credit as of September 2012.
The directive however comes attached to the proviso that insurers clear their debts within this year, a time frame that is less than the two year period requested by the insurance companies.
The Association of Ethiopian Insurers is expected to convene this week to forward a response to the National Bank and set up a template for information exchange it was learned.