Aviation calamity costs EIC 3.8 billion birr
The Ethiopian Insurance Corporation (EIC) settled 5.4 billion birr in insurance claims during the just ended 2021/2 Ethiopian fiscal year. The settled figure, which is the highest in the corporation’s history, is 327 percent higher than the amount paid to insurance claimants last year.
The firm paid 1.3 billion birr in insurance last year.
The state owned insurance firm disclosed in its annual performance report for fiscal years 2022–23 that a large portion of the insurance payment went to an aircraft disaster.
The firm agreed to pay Ethiopian Airlines 3.8 billion birr in compensation for the March 2019 737 MAX tragedy, which killed all 157 people on board.
Despite the fact that the 3.8 billion birr compensation for the ET accident increased compensation paid out by 327 percent in the fiscal year, the figure is 33.7 percent less than EIC expected.
The corporation has been setting up more than seven billion birr as provision for the ET accident since 2019, according to Netsanet Lemessa, EIC’s CEO.
Last Thursday, Netsanet presented the corporation’s annual results. “The provision we preserved for compensation excludes re-insurers’ pay for the airline catastrophe.”
EIC paid out 5.4 billion birr in compensation, with 98.4 percent going to general insurance clients, including aircraft accident victims.
The remaining 1.6 percent was settled for life insurance claimants.
The corporation’s rate of compensation payment against the submitted compensation claims stood at 47.6 percent for the year, according to him.
“In comparison to the large number of claims filed this year, the amount of damage compensation we paid out was less than we expected. When compared to industry rates, our compensation ratio to claims is also lower,” Netsanet said, expressing his pride in his company’s accomplishment.
The total amount of damage compensation given to clients by the firm so far also topped four trillion birr, a 25.4 percent rise over the previous year’s baseline. With the collection of 6.5 billion birr in 2021/2, the corporation’s premium revenue performance achieved 99.6 percent.
The collected premium revenue amounts to 39.3 percent of the industry’s overall premium revenue, according to Netsanet. However, he indicated his management’s displeasure by stating that it could have been considerably higher if premiums from aviation insurance had declined.
In comparison to last year, the collected premium revenue from aviation insurance decreased by 416 million birr.
The aviation insurance premium revenue gap is ascribed to the aviation sector’s poor performance as a result of the COVID-19 epidemic. Aviation customers lost appetite to renew their insurance policy subscriptions, especially after the pandemic spread rate declined.
The company’s profit before taxes was 1.3 billion birr, a 17.1 percent increase over the previous year.