Stepping in to provide exceptional support for businesses damaged by the two-year conflict in North Ethiopia, Ethiopia’s insurance companies are promising to pay claims to companies suffering losses from the fighting in North Ethiopia, particularly Tigray, despite war typically falling outside the scope of insurance policies in the country.
Ethiopia’s insurance firms, through their lobbying organization, are pledging active support by extending relief to companies devastated by the violence. This offers a lifeline for businesses struggling in the aftermath, providing much-needed help for war-related losses that normally fall outside of coverage.
War and conflict are traditionally excluded from most standard insurance policies due to their unpredictable nature and potential for staggering losses.
Global experiences indicate that there are, however, some exceptions that allow for coverage in limited circumstances.
Some policies may compensate for losses from government-declared wars or certain warlike events designated by insurers. In rare cases, an insurance provider may decide to offer coverage for conflict-related damages.
“Our insurance policies exclude war, for which we do not provide compensation,” says Mengistu Bahiru, deputy chief executive officer of the Ethiopian Insurance Corporation (EIC), an industry leader in war-ravaged areas in the Tigray, Afar, and Amhara regions.
There are 17 insurance companies in Ethiopia with a presence across the country, including in North Ethiopia. They generate nearly 20 billion birr in annual premiums, of which almost half is commanded by EIC.
Currently, no insurance company is active in Tigray, which many say is late given that banks have started operations less than a month after the signing of a peace deal between the Tigray People’s Liberation Front (TPLF) and the federal government in Pretoria and Nairobi.
Some insurance firms have already started conducting audits to resume service.
Nigus Anteneh, CEO of Nile Insurance, is among the top executives in the industry who have dispatched a team to Tigray to assess the impact of the war on their branches, which were closed ever since the war began.
“War is certainly excluded when we pay claims. But as we have a national responsibility, there will be exceptions,” Nigus added.
Mengistu also confirmed that the state insurer has also begun conducting damage assessments and identifying ways to resume operations in the region.
“As a state-owned entity, we are more than just a profit-making institution with policy objectives set by the government,” Mengistu said. “Once our damage assessment is complete, we will determine whether claims can be paid in accordance with those broader objectives.”
With insurance companies providing policies under reinsurance firms, they expect zero claims from reinsurers if they agree to pay businesses demanding compensation after suffering from war-related damages.
Both Mengistu and Nigus indicated the possibility of making a decision through their lobbying organization, the Association of Ethiopian Insurance Companies, as the issue is more about corporate social responsibility than industry rules.
Ebsa Mohammed, an insurance expert and manager at Alpha Consultancy, says the issue demands fulfillment of responsibility rather than being governed by industry rules.
“Insurance companies can pay claims in reference to the policies they have sold. And in Ethiopia, no policy rules out compensation for war and war-related damage,” Ebsa said, underscoring that the issue could be addressed by the Union as a donation or way of contributing to the recovery process in war-affected areas.