A Critical Analysis of Horizontal  Competition in the Ethiopian Insurance  Sector

Adane, Abebe

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dc.contributor.author	Adane, Abebe
dc.date.accessioned	2021-09-22T07:48:42Z
dc.date.available	2021-09-22T07:48:42Z
dc.date.issued	2021-09-22
dc.identifier.uri	http://ir.bdu.edu.et/handle/123456789/12629
dc.description.abstract	The main objective of the study was to assess the horizontal competitive status of insurance companies in Ethiopia. The researcher conducted the study by selecting six insurance companies‟ v.i.z the Ethiopian Insurance Corporation, Awash Insurance S.C, Nyala Insurance S.C, United Insurance S.C, Nile Insurance S.C, and Zemen Insurance S.C. The study canvassed the horizontal competitive status of Ethiopian insurers in light of commonly known competition variables i.e. price (premium), product variety and use of technology and innovation. Besides, the study assessed the legal framework and practical applications of notorious areas of collaborations (strategic alliances) in the insurance sector. The study found that concerning insurers‟ competition in premiums, insurers are cutting premiums down and they are in a situation of a price war. Further, Ethiopian insurers provide traditional and identical insurance services and very little effort is made by some insurers to introduce new services to the community. In addition, saving Awash Insurance S.C which employ online claims application and settlement and Nyala Insurance S.C‟s endeavour to introduce Block Chain Technology to connect the financial operations of all its branches, other feasible technologies like online claims notification and settlement, online sales, digital customer advising and follow up, smart contracts, e-insurance etc. are unknown in the sector. The other point of scrutiny was the legal framework and practical applicability of horizontal collaboration (strategic alliance) among insurers in Ethiopia. Concerning the legal framework, the TCCPP under Article 7(1) (a) adopted a rule of reason standard of analysis that allow competitors to collaborate if technological, efficiency and other pro-competitive gains outweighing the anti-competitive effect are present. Besides, Article 4(2) of TCCPP empowers the Council of Ministers to exempt certain sectors vital for economic development from the ambit of competition law though it enacted no exempting regulation yet. Moreover, the country‟s competition legal regime does not have a horizontal cooperation guideline. The attached conditions for coordination, “technological, efficiency and other pro-competitive gains” are found sufficient because other vital requirements such as “pass on to consumers”, “indispensability”, and the “absence of elimination of competition” can be engulfed in the law through interpreting the catch-all phrase “other pro-competitive gains”. However, the attached conditions are not cumulative in the TCCPP. Furthermore, the study revealed that Ethiopian insurers are not practically utilizing common areas of horizontal cooperation (strategic alliances) like research and development, information exchange cooperation, and coinsurance saving reinsurance cooperation. Standardization of terms and conditions of insurance policy is not also practised in the sector. However, the NBE supervises insurers to safeguard the interest of consumers in the policy terms and conditions and no standardization is mandatorily required in the sector. Finally, to escape the existing price war and other competition problems, the study recommends insurers to focus on other competition variables like brand loyalty (reputation), innovation and use of technology and introduction of new insurance services. In addition, insurers in the country are recommended to make strategic alliances. Besides, the study recommends the NBE to come up with a floor premium in consultation with the Association of Ethiopian Insurers. Moreover, actuarial science at its advanced level should also be included in the educational system of the country to solve the dearth of experts. The conditions of coordination in the TCCPP should also be amended to make them cumulative requirements. It also recommends the Council of Ministers to come up with an exemption regulation for the insurance sector or the country needs to have a horizontal cooperation guideline to illuminate areas of coordination. Lastly, the NBE should introduce a coinsurance directive, and information exchange directive, to create a fertile ground for cooperation (strategic alliances) between insurers. The study also recommends the Ethiopian Competition and Consumer Protection Authority to give proper attention to reinsurance cooperation in the country to avoid anti-competitive possibilities	en_US
dc.language.iso	en	en_US
dc.subject	Law	en_US
dc.title	A Critical Analysis of Horizontal Competition in the Ethiopian Insurance Sector	en_US
dc.type	Thesis	en_US