Nyala Insurance Share Company has begun preliminary efforts to establish an Ethiopian re-insurance company. The company is carrying out initial studies to be presented to the board of directors according to Eyob Meherette CEO of the insurance company.

A local re-insurer will save Ethiopia the large amounts of foreign currency required by insurance companies to purchase policies from international re-insurers, said Eyob.

All insurance companies have to pass on some of the risk associated with high liability policies he explained. The re-insurer covers the potential losses and decreases the primary insurer’s risks even in instances when claims are completely unforeseen added Eyob.   

The National Bank of Ethiopia supports the idea of a local re-insurance company although it is yet to establish the regulations that will serve as a framework for such a company according to Eyob. The absence of regulations may mean that it will take some time to actually set up the re-insurance company that they hope to name Nyala Re, he explained.

The re-insurance business is dominated by American and European multinational companies. There are a couple of re-insurers in Africa but they are not as dominant because it requires billions of dollars.

In related news it was announced that Nyala Insurance Company has shown a 19% growth in the last fiscal year. The company also registered a 47% increase in its long term insurance premium according to Woinshet Gossaye Company Finance and Property Management Executive Officer.

Source: Addis Fortune