Licensing and Supervision of Insurance Business · 1. Issuing Authority These Directives are issued...
Transcript of Licensing and Supervision of Insurance Business · 1. Issuing Authority These Directives are issued...
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CONSOLIDATED NATIONAL BANK of ETHIOPIA DIRECTIVES LICENSING AND SUPERVISION OF INSURANCE BUSINESS
Abrham Yohannes Hailu
Law Teacher at Haramaya University
College of Law
Licensed Lawyer
Federal and Harari Courts
E-mail: [email protected]
Mobile: +251913388259
+251915742253
Blog: www.chilot.me
http://abookmedhin.wordpress.com
mailto:[email protected]�http://www.chilot.me/�http://abookmedhin.wordpress.com/�
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CONSOLIDATED NATIONAL BANK of ETHIOPIA DIRECTIVES
LICENSING AND SUPERVISION OF INSURANCE BUSINESS
Table of Contents
DIRECTIVE PAGE SIB/1/1994 LICENSING AND SUPERVISION OF INSURANCE BUSINESS
2 SIB/6/1994 INVESTIGATION FEE TO BE PAID BY INSURANCEAUXILIARIES AND ACTUARIES
15 SIB/8/1995 AMENDMENT OF OPENINGOF BRANCHES
15 SIB/009/95 INSURANCE BROKERS CODE OF CONDUCT
17 SIB/11/1996 LICENSING OF INSURANCE ACTUARY
21 SIB/12/1996 INSURANCE BUSINESS LICENSING OF INSURANCE LOSSASSESSORS AND LOSS ADJUSTORS
22 SIB/17/98 Manner of Reporting Financial Information
24 SIB/18/98 Amendment of Licensing of Insurance Agent
28 SIB/19/98 Sanctions against Failure to Maintain Renewed Business License and Professional Indemnity Insurance Policy
31 SIB/21/2001 Amendment of Licensing of Insurance Broker
33 SIB/22/2002 Licensing of Insurance Surveyors
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SIB/24/2004 Amendment of PROHIBITION OF ISSUANCE OF CERTIAN TYPES OF BONDS BYINSURANCE COMPANIES
37 SIB/25/2004 INVESTMENT OF INSURANCE FUNDS
40 SIB/26/2004 MANNER OF COMPUTING MARGIN OF SOLVENCY FOR INSURANCECOMPANIES
46 SIB/27/2004 Amendment of FINE FOR NON-COMPLIANCE WITH THE DIRECTIVES OF THE NATIOAL BANK OF ETHIOPIA
48 SIB/28/2004 EMERGENCY TRAVEL HEALTH INSURANCE
50 SIB/28/2004 LICENSING OF INSURNACE BROKER
52 SIB/30/2007 LICENSING OF INSURANCE AGENT
57 SIB/31/2010 LICENSING OF INSURANCE BROKERS
64 SIB/1/1994 LICENSING AND SUPERVISION OF INSURANCE BUSINESS
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¾›=ƒÄåÁ wN?^© v”¡ NATIONAL BANK OF ETHIOPIA ADDIS ABABA
TELAGRAPHIC ADDRESS PLEASE ADDRESS ANY REPLY TO
N A T I O N B A N K
TELEX 21020 P.O.BOX 5550
ADDIS ABABA
CODES USED
PETERSON 3rd
& 4th
ED.
BENTLEY’S 2nd
PHRASE
Supervision of Insurance Business
Title Directive
No. Licensing and Supervision of Insurance Business SIB/1/94
Investigation Fee to be paid by Insurance
Auxiliaries and Actuaries
SIB/6/94
Amendment of Opening of Branches SIB/8/95
Insurance Brokers Code of Conduct SIB/9/95
Licensing of Insurance Actuary SIB/11/96
Licensing of Insurance Loss Assessors and Loss
Adjustors
SIB/12/96
Manner of Reporting Financial Information SIB/17/98
Licensing of Insurance Agent SIB/18/98
Sanction against Failure to Maintain Renewed SIB/19/98
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Business License and Professional Indemnity
Insurance Policy
Amendment of Licensing of Insurance Broker SIB/21/2001
Licensing of Insurance Surveyors SIB/22/2002
Amendment of Prohibition of Issuances of
Certain Types of Bands by Insurance Companies
SIB/24/2004
Investment of Insurance Funds SIB/25/2004
Manner of Computing Margin of Solvency for
Insurance Companies
SIB/26/2004
Amendment of Fine for Non-Compliance with
the Directives of the National Bank
SIB/27/2004
Emergency Travel Health Insurance SIB/28/2004
LICENSING AND SUPERVISION OF INSURANCE BUSINESS
DIRECTIVE NO. SIB/1/1994
1. Issuing Authority
These Directives are issued by the National Bank of Ethiopia pursuant to the authority vested in it by Article 41 of the
Monetary and Banking Proclamation No. 83/1994 and Article 42 of the Licensing and Supervision of Insurance business
Proclamation No. 86/1994.
2. Definitions
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In these Directives, unless the context provides otherwise:
2.1 "Related parties" shall mean directors, founders, principal officers, employees and other businesses in which they have
direct interest.
2.2 "Residence" shall have the meaning assigned to it under Article 174 of the Commercial Code of Ethiopia.
2.3 "Proclamation" shall mean proclamation to provide for the Licensing and Supervision of Insurance Business No.
86/1994.
3. Information Required From Applicants For License
Along with those provided for under the Proclamation, the following Information shall be contained in any application for a
license to be an insurer.
3.1 Evidence for paid up capital which includes certificate of deposit in a blocked subscription account and evidence for
valuation of contribution in kind.
3.2 Names and occupation (including dates and addresses of previous employment), of the organizers of the company if
these are other than the directors.
3.3 Feasibility study document.
¾›=ƒÄåÁ wN?^© v”¡ NATIONAL BANK OF ETHIOPIA
3.4 Projection of Financial statements for the first three years of operation showing major categories of liabilities.
3.5 Disclosure of the identity of shareholders who have acquired more than ten percent of the capital stock indicating their
names, nationality number and value of shares held.
3.6 Separate cost of vault, equipment, furniture and fixture purchased or leased.
3.7 Authenticated ownership certificate and/or lease agreement for items listed under Section 10.1 of the application form.
3.8 Description of any purchase or proposed purchase of goods and services, or lease of real estate by the insurer from
related parties.
3.9 Proposal of insurance coverage and extent of such coverage.
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3.10 Curriculum vitae of the proposed Chief Executive, founders and/or directors including their age, marital status,
education, employment history for the past ten years, their experience in business and financial affairs, their involvement
in civic social and charitable activities including any leadership position held.
3.11 Duly completed application form as prescribed by the Bank and submit enclosures specified therein.
3.12 Proposed organizational chart of the insurer, and brief description of the functions of the main organizational units.
4. Criteria For Selection Of Chief Executive
4.1 Education
A minimum of first degree or equivalent in relevant field acquired from a university or higher institution of learning.
4.2 Experience
A minimum of ten years of reputable managerial experience in insurance or related business.
4.3 Age
A minimum of thirty five years.
4.4 Marital Status
Preferably married or responsible to a family.
¾›=ƒÄåÁ wN?^© v”¡ NATIONAL BANK OF ETHIOPIA
5. Criteria for Selection of Members of Board of Directors
5.1 Education
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A minimum completion of high school education with ability to read and grasp contents of reports, especially financial
statements.
5.2 Experience
Member of Board of directors shall have adequate managerial experience in business, and/or similar organizations.
5.3 Age
A minimum of 30 years of age
6. Fees
6.1 A company applying to undertake Insurance Business shall pay investigation fee of Birr1,750.- (Birr one thousand seven
hundred fifty only), that is to be paid at the time of lodging an application.
6.2 A company licensed to undertake insurance business shall pay initial registration fee currently prescribed by the Ministry
of trade for registration of Memorandum and Articles of Association.
6.3 A company licensed to undertake general or long term Insurance Business shall pay initial license and subsequent annual
renewal fee of Birr 2,000.-(Birr two thousand only).
6.4 A company licensed to undertake both general and long term Insurance Business shall pay initial license and subsequent
annual renewal fee of Birr 3,000.- (Birr three thousand only).
These Directives shall enter into force as of Fifteenth day of June 1994.94
1. Name of applicant and Designation__________________________________
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___________________________________________.
2. Proposed Name of the company (under formation) ______________________
___________________________________________.
3. Name of the Spokesperson_________________________________________
Address: ________________________________________
_________________________________________
_________________________________________
4. Address of company, and proposed branches
4.1 Head office Address:
Location_________________________________________________
P.O.Box _________________________
Tel. _____________________________
Telex ___________________________
Fax _____________________________
4.2 Branch Address: (if any)
4.2.1 Location _______________________________________________
Tel. ________________________
P.O.Box _____________________
4.2.2 Location _____________________________________
Tel. _________________________
P.O.Box _____________________
(If there are more than two proposed branches, annex a list in same form).
5. Names and Addresses of the Founders
5.1 Name Nationality Occupation Residence Address Number of
Photo of
Representative
of Applicant
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Shares Held
5.1.1
5.1.2
5.1.3
5.1.4
5.1.5
5.1.6
5.1.7
5.1.8
5.1.9
5.1.10
* (Where the founders are more than ten, annex a list in same form)
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6. Names and Addresses of Members of Board of Directors
6.1 Name Occupation Residence Nationality Address Number of
Shares Held
6.1.1
6.1.2
6.1.3
6.1.4
6.1.5
6.1.6
6.1.7
6.1.8
5.1.9
6.1.10
6.1.11
6.1.12
6.2 (Attach curriculum vitae of each director)
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7. Contributions:
7.1 In cash Birr _________________________________________________
7.2 In kind (specify the type of property and value)
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
8. Initial capital of the Company (in Birr)
8.1 Authorized capital_____________________________________
8.2 Subscribed capital _____________________________________
8.3 Paid up capital ________________________________________
9. Shares
9.1 Number of shares issued _____________________________________
9.1.1 Number of shares held by founders ____________________
9.1.2 Number of shares held by subscribers__________________
9.2 Par value of each share in Birr ________________________________
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10. Provide the following information with respect to:
10.1 Cost of premises' equipment and others where purchased or leased
by the applicant.
Item Manner of
Acquisition
Cost
Building
Land
Vault
Equipment
Fixture
Professional Services
Total
10.2 Indicate if any of these items are leased or to be leased or purchased or to
be purchased from related parties.
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
____________________________________
* Lease, purchase, rent .......etc.
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10.3 Lease agreement
Description of
Premises
Leased or to be
Leased
Terms of
Lease
Expiry Date
11. Types and extent of the company's proposed insurance coverage
________________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
________________________________________________________
12. Name and Address of Insurer's actuary; if any
________________________________________________________________
________________________________________________________
13, Name and addresses of reinsures
________________________________________________________________
________________________________________________________
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14. Identify the main class or classes of Insurance to be undertaken
Long term General
{ } { }
15. If general insurance business is to be undertaken, identify the class or classes.
15.1 Accident and Health _______________
15.2 Motor Vehicles ________________
15.3 Aircraft damage and liability ________________
15.4 Ship damage and liability ________________
15.5 Goods in transit _________________
15.6 Property damage _________________
15.7 Pecuniary loss ________________
15.8 General liability ________________
Others (Specify) _____________________
_____________________
16. Give statements that Board of Directors and the Chief Executive are vetted to
fulfill requirements stated under Article 33 of Proclamation 86/1994.
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
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17. Any other statement
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
18. Under pain of penalty provided under Article 41 of the Proclamation, I
hereby declare that the above particulars and the information provided in the
enclosure attached are true and correct and undertake to notify the Bank of
any material alteration in the information and particulars in accordance with
Article 35 of the Proclamation.
Date________________________ Signature ____________________
Name and Official Designation
of the Applicant
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The following particulars are attached here to:
ENCLOSURES
1. Four authenticated copies of the Memorandum and Articles of Association by which
the Company is constituted.
2. Four copies of bank certificates of deposit for contributions in cash held in
subscription blocked account.
3. Four copies of valuation evidence for capital contribution in kind.
4. Two copies of feasibility study documents.
5. Two copies of projected Financial statements for the first three years of operation.
6. Two copies of authenticated ownership certificate for items listed under Section
10.1 of the application form.
7. Two copies of evidence of insurance coverage for premises already acquired or
leased.
8. Four copies of curriculum vitae of Chief Executive officer, founders and/or members
of Board of Directors.
9. One copy of evidence of payment of investigation fee.
10. Two copies of organizational chart of the proposed insurance company and
description of functions of main organizational units.
11. Four passport size photographs of the official designate who applies for the license
on behalf of the Company.
12. Two copies of disclosure of the identity of share holders who have acquired more
than ten percent of the Capital stock, indicating their names, nationality, number and
value of shares held.
13. Two copies of each form of insurance policy together with endorsements and
proposal forms which the company proposes to issue.
14. Four copies of schedules of latest premium rates and commissions payable for all
classes of business transacted.
15. Four copies of list of all agents and brokers to whom commission is payable.
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LICENSING AND SUPERVISION OF
INSURANCE BUSINESS
INVESTIGATION FEE TO BE PAID BY INSURANCE
AUXILIARIES AND ACTUARIES
DIRECTIVE NO. SIB/6/1994
1. ISSUING AUTHORITY
Theses Directives are issued by the National Bank of Ethiopia pursuant to the
Authority vested in it by Article 41 of the Monetary and Banking Proclamation
No. 83/1994 and by Article 25 of the Licensing and Supervision of Insurance
Business Proclamation No. 86/1994.
2. INVESTIGATION FEE
An applicant applying for a license to undertake a business as an insurance
auxiliary or an actuary shall pay investigation fee of Birr 300 (three hundred) to
the National Bank of Ethiopia.
These directives shall enter into force as of 3rd
day of November 1994.
LICENSING AND SUPERVISION OF
INSURANCE BUSINESS
AMENDMENT OF OPENING
OF BRANCHES
DIRECTIVE NO. SIB/8/1995
1. ISSUING AUTHORITY
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These Directives amending Directives No. SIB/2/1994 are issued by the
National Bank of Ethiopia pursuant to the authority vested in it by Article
41 of the Monetary and Banking Proclamation No. 83/1994 and by Article
41 of the Monetary and Banking Proclamation No. 83/1994 and by Article 25 of
the Licensing and Supervision of Insurance Business Proclamation No. 86/1994.
2. Amendment
The National Bank of Ethiopia Licensing and Supervision of Insurance
Business Directive No. SIB/2/1994 is hereby amended as follows.
"4. Duty of the Bank
The Bank shall give a written response to the applicant within thirty
calendar days from the date of receipt of the application and
feasibility study under Article 3 hereof.
./.
¾›=ƒÄåÁ wN?^© v”¡¾›=ƒÄåÁ wN?^© v”¡¾›=ƒÄåÁ wN?^© v”¡¾›=ƒÄåÁ wN?^© v”¡
NATIONAL BANK OF ETHIOPIA
PAGE 2
5. Fee
An insurer licensed to open a branch shall pay Birr 500.00 (Five Hundred
Birr) for each licensed branch."
These Directives shall enter into force as of 22nd day of May 1995.
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INSURANCE BROKERS CODE OF CONDUCT
DIRECTIVE NO. SIB/009/95
1. Short Title
This Directive may be cited as The Insurance Brokers Code of conduct Directive No.
SIB/011/1995
2. Issuing Authority
These Directives are issued by The National Bank of Ethiopia pursuant to the Authority
vested in it by Article 41 of the Monetary and Banking Proclamation No. 83/1994 and by
Article 42 (j) of the Licensing and Supervision of Insurance Business Proclamation No.
86/1994.
3. Definition
(a) 'Insurance Broker' shall mean a person duly licensed as Insurance
Broker in accordance with directive No. SIB/3/1994;
(b) 'Insurer' means a person or body of persons carrying on Insurance
business;
(c) 'Advertisements' or 'Advertising' means canvassing, the offer of
services or other methods whereby business is sought by Insurance
Brokers.
1. This Code of Conduct shall serve as a guide to Insurance Brokers and other
persons concerned with their conduct but the mention or lack of mention in it
of a particular act or omission shall not be taken as conclusive of any question
of professional conduct.
The objective of this Directive is to assist in establishing a recognized
standard of professional conduct required of all Insurance Brokers who
should, in the interests of the public and in the performance of their duties,
bear in mind both this objective and the underlying spirit of this Code. ¾›=ƒÄåÁ wN?^© v”¡ NATIONAL BANK OF ETHIOPIA
Matters which might relate to acts or omissions amounting to negligence will
be dealt with, if necessary, by the Courts but the Bank acknowledges that
gross negligence or repeated cases of negligence may amount to
unprofessional conduct.
2. The following are, in the opinion of the Bank, the acts and omissions which, if
done or made by Licensed Insurance Brokers constitute unprofessional
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conduct: namely any acts or omissions that breach the fundamental principles
governing the professional conduct of Insurance Brokers set out in paragraph
3 below.
3. The principles mentioned in paragraph 2 above are as follows:
A. Insurance Brokers shall at all times conduct their business with utmost
good faith and integrity;
B. Insurance Brokers shall do everything possible to satisfy the insurance
requirements of their clients and shall place the interests of those clients
before all other considerations. Subject to these requirements and interests,
Insurance Brokers shall have proper regard for others;
C. Statements made by or on behalf of Insurance Brokers when advertising
shall not be misleading or extravagant.
The following are some specific examples of the application of these principles:
(1) In the conduct of their business Insurance Brokers shall
provide advice objectively and independently.
(2) Insurance Brokers shall only use or permit the use of the
description 'Insurance Broker' in connection with a business
provided that business is carried on in accordance with the
requirements of Proclamation No. 86/1994 Art.2(11).
(3) Insurance Brokers shall ensure that all work carried out in
connection with their insurance broking business shall be under the
control and day-to-day supervision of a Managing partner and he
shall do everything possible to ensure that employees are made
aware of this Code.
(4) Insurance Brokers shall on request from the client explain the
differences in and the relative costs of, the principal types of
insurance which in the opinion of the Insurance broker might suit a
client's needs. ¾›=ƒÄåÁ wN?^© v”¡ NATIONAL BANK OF ETHIOPIA
(5) Insurance Brokers shall ensure the use of sufficient number
of insurers to satisfy the insurance requirements of their clients.
Sufficient number of insurers shall mean more than for 50% of the
license insurer.
(6) Insurance Brokers shall, upon request, disclose to any client
who is, or is contemplating becoming, the holder of a policy of
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insurance the amount of commission paid or to be paid by the
insurer under any relevant policy of insurance.
(7) Insurance Brokers shall not withhold from the policy holder
any written evidence or documentation relating to the contract of
insurance without adequate and justifiable reasons being disclosed
in writing and without delay to the policy holder. If an Insurance
Broker withholds a document from a policy holder by way of a lien
for monies due from that policy holder he shall provide the reason
in the manner required above.
(8) Insurance Brokers shall inform a client of the name of all
insurers with whom a contract of insurance is placed. This
information shall be given at the inception of the contract and any
charges thereafter shall be advised at the earliest opportunity to the
client.
(9) Before any work involving a charge is undertaken or an
agreement to carry out business is concluded, Insurance Brokers
shall disclose and identify any amount they propose to charge to
the client or policy holder which will be in addition to the premium
payable to the insurer.
(10) Insurance Brokers shall disclose to a client any payment
which they receive as a result of securing on behalf of that client
any service additional to the arrangement of a contract of
insurance.
(11) Insurance Brokers shall have proper regard for the wishes of
a policy holder or client who seeks to terminate any agreement with
them to carry out business.
(12) Any information acquired by an Insurance Broker from his
client shall not be used or disclosed except in the normal course of
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¾›=ƒÄåÁ wN?^© v”¡ NATIONAL BANK OF ETHIOPIA
(13) negotiating, maintaining, or renewing a contract of insurance
for that client or unless the consent of the client has been obtained
or the information is required by a court of competent jurisdiction.
(14) In the completion of the proposal form, claim form, or any
other material document, Insurance Brokers shall make it clear that
all the answers or statements are the client's own responsibility.
The client should always be asked to check the details and told that
the inclusion of incorrect information may result in a claim being
repudiated.
(15) Advertisements made by or on behalf of Insurance Brokers
shall be restricted to contractual benefits only.
(16) When advertising their services directly or indirectly either in
person or in writing Insurance Brokers shall disclose their identity,
occupation and purpose before seeking information or before
giving advice.
(17) Insurance Brokers shall display in any office where they are
carrying on business and to which the public have access a notice
to the effect that a copy of the Code of Conduct is available upon
request and that if a member of the public whishes to make a
complaint or requires the assistance of the Bank in resolving a
dispute he may wire to:
National Bank of Ethiopia
P.O.Box 5550
Fax No. 51-45-88
Telex No. 21020
Addis Ababa
These Directive shall come into force as of 17th day of November 1995.
November 16, 1995
LICENSING AND SUPERVISION OF
INSURANCE BUSINESS
LICENSING OF INSURANCE ACTUARY
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DIRECTIVE No. SIB/11/1996
1. Issuing Authority
These Directives are issued by the National Bank of Ethiopia pursuant to the
authority vested in it by Article 41 of the Monetary and Banking Proclamation No.
83/1994 and by Article 25 of Licensing and Supervision of Insurance Business
Proclamation No. 86/1994.
2. Requirements
An applicant for a license:
2.1 has to be an Ethiopian national;
2.2 must not have been convicted of an offence involving dishonesty or fraud,
whether in Ethiopia or elsewhere; and
2.3 should maintain a professional indemnity insurance cover or produce property
guarantee for Birr100,000.= (one hundred thousand Birr).
3. Qualifications
An applicant should hold a degree/diploma from
3.1 Institute of Actuaries (London); or
3.2 Faculty of Actuaries (Scotland); or
3.3 Society of Actuaries (U.S.A); or
3.4 Degree or diploma acquired from professional institution with similar status.
4. An Actuary licensed outside Ethiopia may engage in actuarial valuation business
provided he/she is authorized to do so by the Bank.
5. Fees
A person applying for a license to be an Actuary shall pay investigation fee of
Birr300.= (three hundred Birr) and initial license and subsequent annual renewal
fee of Birr250.= (Two hundred fifty Birr).
6. Other Requirements
An applicant shall submit;
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6.1 name and occupation (including dates and addresses of previous
emplomyment);
6.2 four passport size photographs;
6.3 curriculum vitae and
6.4 duly completed application from as prescribed by the Bank and enclosures
specified therein.
These Directives shall enter into force as of 8th
day of April 1996.
April 5, 1996
LICENSING AND SUPERVISION OF
INSURANCE BUSINESS
LICENSING OF INSURANCE LOSS
ASSESSORS AND LOSS ADJUSTORS
DIRECTIVE No. SIB/12/1996
1. Issuing Authority
These Directives are issued by the National Bank of Ethiopia pursuant to the
authority vested in it by Article 41 of the Monetary and Banking Proclamation
No. 83/1994 and Article 25 of the Licensing and Supervision of Insurance
Business Proclamation No. 86/1994.
2. Requirements
An applicant for a license:
2.1 has to be an Ethiopian national;
2.2 must not have been convicted of an offence involving dishonesty or fraud,
whether in Ethiopia or elsewhere; and
2.3 maintain a professional indemnity insurance cover or produce property
guarantee for Birr 100,000.= (One hundred thousand Birr).
3. Qualifications
3.1 Loss Assessor
An applicant should hold a diploma in the field from institutions acceptable by
the Bank and sufficient experience in the profession he is applying for.
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3.2 Loss Adjustor
An applicant should hold a diploma from the Chartered Institute of Loss
Adjustors or institutes with similar status who provide professional qualification
in loss adjusting.
4. Business Organization
If the applicant is a partnership it has to be organized in the form of unlimited
liability, and the managing partner should meet the requirements provided for under
sections 3.1 or 3.2 heretofore.
5. Loss Assessors or Loss Adjustor Licensed Outside Ethiopia
Loss Assessor or Loss Adjustor licensed outside Ethiopia may engage in loss
assessing or adjusting business provided he/she is authorized to do so by the
Bank.
6. Fees
A person applying for a license to be Loss Assessor or Loss Adjustor shall pay
investigation fee of Birr300.= (Three hundred Birr) and initial license and subsequent
annual renewal fee of Birr250.= (Two hundred fifty Birr).
7. Other Requirements
An applicant shall submit:
7.1 name and occupation (including date and addresses of previous employment);
7.2 four passport size photographs;
7.3 curriculm vitae; and
7.4 duly completed application form as prescribed by the Bank and enclosures
specified therein .
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These Directives shall enter into force as of 8th
day of April 1996.
April 5, 1996
LICENSING AND SUPERVISION OF
INSURANCE BUSINESS
Directive No. SIB/17/98
Manner of Reporting Financial Information
1. ISSUING AUTHORITY
These Directives are issued by the National Bank of Ethiopia pursuant to the
authority vested in it by Article 41 of the Monetary and Banking Proclamation
No. 83/1994 and by Article 42(j) of the Licensing and supervision of Insurance
Business Proclamation No. 86/1994.
2. SUBMISSION OF REPORTS
Each insurer shall submit to the Supervision Department of the National Bank of
Ethiopia separate quarterly reports for general and long-term insurance business
within twenty days after the end of each quarter in the manner shown in the return
formats attached herewith which shall form a part hereof.
3. DEFINITIONS
1. General Insurance Business
For the purpose of reporting financial information:
(a) Aviation Insurance Business shall mean the business of
effecting and carrying out contracts of insurance:
i) upon the aircraft or upon the machinery, tackle or
furniture or equipment of aircraft;
ii) against damage arising out of or in connection with the
use of aircraft or against risks incidental to construction, repair or
landing of aircraft, including airport owners' liability and third party
risks;
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iii) against loss of life by accident or injury by accident to
aircrew members whilst performing or deemed to be performing
their duties in accordance with their employment but excluding contracts of
insurance in respect of risks of aviation excess of loss or crew loss of
license. ¾›=ƒÄåÁ¾›=ƒÄåÁ¾›=ƒÄåÁ¾›=ƒÄåÁ wN?^© v”¡ wN?^© v”¡ wN?^© v”¡ wN?^© v”¡ NATIONAL BANK OF ETHIOPIA
(b) Engineering Insurance Business shall mean the business of
effecting and carrying out contracts of insurance of various perils arising
out of plant and machinery, such as explosion or collapse of boilers,
breakdown of electrical or mechanical plant and lifts and cranes
Machinery Break Down (MBD), and resultant damage to the insured's
surrounding property and liability to third parties arising therefrom; it
shall also include contracts of insurance in respect of Contractors' All
Risks (CAR), Erection All Risks (EAR) and Machinery Break Down
(MBD) and damage to property on site however caused and third party
liability arising therefrom.
c) Fire Insurance Business shall mean the business of effecting and
carrying out of contracts of insurance other than those incidental to some
other class of insurance business, against loss of or damage to property
due to fire, explosion, storm, flood, and other occurrences customarily
included among the risks insured against in fire insurance polices; it
shall also include burglary, glass, all risks, householder's insurance.
d) Liability Insurance Business shall mean the business of effecting
and carrying out contracts of insurance against risks of persons insured
incurring liabilities to third parties, not being risks arising out of, or in
connection with the use of motor vehicles or out of, or in connection
with the use of, vessels or aircraft or risks incidental to the construction,
repair or docking of vessels or aircraft.
e) Marine Insurance Business shall mean the business of effecting
and carrying out contracts of insurance:-
i) upon vessels or upon the machinery, tackle, furniture or equipment of
vessels;
ii) upon goods, merchandise or property of any description on board
of vessels;
iii) upon the freight of, or any other interest in or relating to, vessels;
iv) against liability arising out of, or in connection with, the use of
vessels;
v) against risks incidental to the construction, repair or docking of
vessels, including third-party risks;
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vi) against transit risks (whether the transit is by sea, inland, water,
land or air, or partly one and partly another), including risks
incidental to the transit insured from the commencement of the
transit to the ultimate destination covered by the insurance; or
¾›¾›¾›¾›=ƒÄåÁ wN?^© v”¡=ƒÄåÁ wN?^© v”¡=ƒÄåÁ wN?^© v”¡=ƒÄåÁ wN?^© v”¡ NATIONAL BANK OF ETHIOPIA
vii) against any other risks which are customarily undertaken in
conjunction with, or as incidental to, the undertaking of such
business as falls within this definition.
f) Motor Insurance Business shall mean the business of effecting
and carrying out contracts of insurance against loss of, or damage to, or
arising out of or in connection with the use of, motor vehicles, inclusive of
third-party risks but exclusive of transit risks.
g) Accident and Health Insurance Business shall mean the business
of effecting and carrying out contracts of insurance against risks of the
persons insured sustaining injury as the result of an accident or an accident
of a specified class or dying as the result of an accident or of an accident
of a specified class or becoming incapacitated in consequence of diseases
or of disease of a specified class, not being contracts of long-term
insurance business.
h) Pecuniary Insurance Business shall mean the business of
effecting and carrying out contracts of insurance against loss of or damage
to property due to theft or any other cause not covered under any other
class and shall include the insurance of cash in transit, fidelity guarantee,
all risks, bonds and credit.
i) Workmen's Compensation Insurance Business shall mean the
business of effecting and carrying out contracts of insurance against the
liability of the employer to the employees in respect of any injury or
disease arising out of and in the course of their employment.
j) Other Insurance Business shall mean the business of effecting
and carrying out contracts of insurance which are not principally or wholly
of any type or types included in the preceding classes of business but shall
include insurance of livestock and crop insurance.
2. Long-term Insurance Business
For the purpose of reporting financial information:
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a)Industrial Life Assurance Business shall mean the business of effecting
assurances on human life, premiums in respect of which are payable, at
intervals, to collectors sent by the insurer to each holder of a policy or to his
residence or place of work.
¾›=ƒÄåÁ wN?^© v”¡¾›=ƒÄåÁ wN?^© v”¡¾›=ƒÄåÁ wN?^© v”¡¾›=ƒÄåÁ wN?^© v”¡ NATIONAL BANK OF ETHIOPIA
b ) Ordinary Life Assurance Business shall mean life assurance business,
being business of, or in relation to, the issuing of or the undertaking of
liability under ordinary life polices. Ordinary life policy means a policy of
life assurance other than a policy of industrial life assurance.
a) Superannuation Business shall mean life
assurance business, being business of, or in relation to, the issuing of or
the undertaking of liability under superannuation, group life and
permanent health insurance polices:
i) that is vested in the trustees of a fund established or
maintained by a person, being a fund the terms and conditions
applicable to which provide for:
the payment of contributions to the fund by that person; and
Payments being made from the fund, on account of injury, sickness, retirement or
death of the employees of that person or a company in which that person has
a controlling interest; or
ii) that was:
effected for the purposes of a superannuation or retirement scheme; or
accepted by the person maintaining such a scheme for the purpose of the scheme.
4. SPECIFIC PRESCRIPTIONS
For the purpose of reporting financial information:
1. The inception date, i.e. the date on which liability of an insurer begins
under a contract of insurance, shall be the date for recognition of premiums.
Where an insurance contract provides permanent open cover, each
anniversary date of the contract shall be deemed the inception date.
2. Premiums shall be shown net of discounts, refunds and rebates.
3. Amounts of commission which may include brokerage fee or other
remuneration paid to intermediaries shall be separately shown under
appropriate headings and shall not be deducted from premium amounts.
4. Claims amounts shall include claims expenses and provisions for
outstanding claims shall include provisions for Incurred But Not Reported
(IBNR) claims.
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5. Premiums, claims, surrenders, annuities and commissions shall be
shown net of reinsurance transactions related thereto.
6. Reserves for Unearned Premiums in respect of each class of general
insurance business shall be computed on the basis of the one-twenty fourth
method. ¾›=ƒÄåÁ wN?^© v”¡¾›=ƒÄåÁ wN?^© v”¡¾›=ƒÄåÁ wN?^© v”¡¾›=ƒÄåÁ wN?^© v”¡ NATIONAL BANK OF ETHIOPIA
7. Reserves for Incurred But Not Reported (IBNR) claims in respect of
each class of general insurance business shall be 10% (ten percent) of net
earned premium.
8. where an asset which is encumbered is included in the balance sheet,
particulars of such an asset, the nature of the encumbrance and the amount
secured by the encumbrance shall be attached to the balance sheet.
9. Particulars of all contingent liabilities other than liabilities under
contracts of insurance shall be attached.
5. REPORTING PERIOD
For the purpose of reporting financial information,
First Quarter shall mean the period running from July 1 to September 30,
Second Quarter shall mean the period running from October 1 to December 31,
Third Quarter shall mean the period running from January 1 to March 31,
Fourth quarter shall mean the period running from April 1 to June 30 of each
financial year.
6. EFFECTIVE DATE
These Directives shall be effective as of the 11th day of May 1998.
LICENSING AND SUPERVISION OF
INSURANCE BUSINESS
Directive No. SIB/18/98
Amendment of
Licensing of Insurance Agent
1. Issuing Authority
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These Directives are issued by the National Bank of Ethiopia pursuant to the
authority vested in it by Article 41 of the Monetary and Banking Proclamation No.
83/1994 and by Article 25 of the Licensing and Supervision of Insurance Business
Proclamation No. 86/1994.
2. Requirements
2.1 Where the applicant is a natural person:
a) He/She has to be an Ethiopian national and should at least have
completed secondary level of education and have sufficient
experience and/or training in insurance business;
b) Where an applicant has sufficient training in insurance and/or has
served as an insurance sales agent for at least 7(seven) years but
cannot produce evidence of completion of secondary level of
education for reasons acceptable to the Bank, the National Bank of
Ethiopia may waive the requirement for such evidence.
c) He/She has not been convicted by court of law in any country for an
offense involving dishonesty.
2.2 Where an application is made:
a) to obtain a license to carry on business as a general insurance agent,
the agent shall deposit Birr 20,000:- (Twenty Thousand) with the
NBE or shall produce a property of value not less than the said
amount or shall maintain a professional indemnity insurance cover of
Birr 20,000:- (Twenty Thousand);
b) to obtain a license to carry on business as life insurance agent, the
principal insurer shall deduct 10% (Ten Percent) of the commission
paid to the agent and transfer the balance with a statement thereon to
the NBE within five days after the end of every quarter until such
amount reaches the sum of Birr 20,000.- (Twenty Thousand) or the
life insurance agent shall produce a property of value not less than
the said amount or shall maintain a professional indemnity insurance
cover of Birr 20,000.- (Twenty Thousand);
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c) to obtain a license to carry on business as both general and life
insurance agent, the agent shall deposit with the NBE Birr 40,000
(Forty Thousand) or maintain a professional indemnity insurance
cover of Birr 20,000 (Twenty Thousand) in respect of each main line
of insurance agency business.
2.3 Where the applicant is a juridical person:
a) It has unlimited liability;
b) It has its head office in Ethiopia and fully owned by Ethiopian
nationals;
c) The Chief Executive of the agency should at least meet the
education, experience and other requirements provided for under
article 2.2 hereof.
Training
3.1 Training offered by licensed and existing insurers prior to August, 1996, for
their prospective insurance agents is acceptable by the Bank where issued
certificate is accompanied by a trainee's copy indicating course offered and
credit hours assigned to each course.
3.2 For the purpose of application of sub article 3.1 of this section 3, the
concerned Insurance Company shall submit the list of courses offered along
with credit hours assigned to each course, names and profiles of instructors
of the said courses.
3.3 Beginning from August 1996, unless it is provided otherwise by the Bank's
Directives, recognition is given only to the training offered to insurance sales
agents by the Ethiopian Institute of Banking and Insurance or institutions
engaged in similar training activities acceptable to the National Bank of
Ethiopia.
3.4 Insurers shall provide a minimum of 30 hours of refresher course every year
to their licensed agents.
4. Fees
A person applying for a license to carry on business as an insurance agent shall pay
initial license and subsequent annual renewal fees of Birr 250.-(Two Hundred Fifty).
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5. Other Requirements
An applicant for a license to be an insurance agent shall submit to the Bank:
5.1 name and occupation (including date and address of previous employment);
5.2 four passport size photographs of the applicant or the chief executive as the
case
may be;
5.3 curriculum vitae of the agent; and
5.4 duly completed form as prescribed by the Bank and submission of
enclosures specified therein.
6. Repeal
Directives No. SIB/4/1994, SIB/13/1996 and SIB/15/1997 are hereby repealed and
replaced by these Directives.
These Directives shall enter into force as of the 1st day of August 1998.
LICENSING AND SUPERVISION OF
INSURANCE BUSINESS
Directive No. SIB/19/98
Sanctions against Failure to Maintain Renewed
Business License and Professional Indemnity
Insurance Policy
1. Issuing Authority
These Directives are issued by the National Bank of Ethiopia (hereinafter called “the
Bank”) pursuant to the authority vested in it by Article 41 of the monetary and
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Banking Proclamation No. 83/1994 and Article 42(j) of the Licensing and
Supervision of Insurance Business Proclamation No. 86/1994.
2. Definition
An “Insurance Auxiliary” shall mean an insurance agent, insurance broker, loss
adjuster, loss assessor or insurance surveyor.
3. Penalty for Failure to Apply for Renewal of Business License
3.1 Any insurance company that fails to apply for the renewal of its business
license within one month after the expiry date of such license shall be subject
to a fine of Birr 500 (Five hundred Birr).
3.2 Any insurance auxiliary or actuary that fails to apply for the renewal of the
business license within one month after the expiry date of such license shall
be subject to a fine of Birr 150 (One hundred fifty Birr).
4. Sanction against Failure to Maintain Valid Professional Indemnity Insurance
Policy
4.1 The Bank shall cancel the license of any insurance auxiliary or actuary who
fails to maintain valid Professional Indemnity Insurance Policy at all times.
4.2 For the purpose of ensuring compliance with the requirement of sub-article
4.1 of this article, an insurance auxiliary or actuary shall promptly file with
the Bank a Copy of the valid Professional Indemnity Insurance Policy upon
its renewal.
4.3 Sub-article 4.1 of this article does not apply to insurance auxiliaries who
hold deposits with the Bank or have pledged property as guarantee.
5. Waiver
The Bank may waive the sanction specified under sub-article 4.1 hereinabove on
grounds it considers to be acceptable.
6. Effective Date
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These Directives shall be effective as of the 1st day of August 1998.
LICENSING AND SUPERVISION OF INSURANCE BUSINESS Directive No. SIB/21/2001 Amendment of Licensing of Insurance Broker
1. ISSUING AUTHORITY
These Directives are issued by the National Bank of Ethiopia pursuant to
the authority vested in it by Article 41 of the Monetary and Banking
Proclamation No. 83/1994 and by Article 25 and 42(j) of the Licensing and
Supervision of Insurance Business Proclamation No. 86/1994.
2. DEFINITION
2.1. "The Bank" shall mean the National Bank of Ethiopia.
2.2. "Managerial Position", for the purpose of these directives, shall
mean the position of an insurance company branch manager or
above that involves directly transacting insurance business in all or
several classes.
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2.3. "Broker" will take the meaning given to it under proclamation
No.86/94 article 11.
3. REQUIREMENTS FOR FIRMS
In order to be licensed as a broker, the applicant shall meet the following
conditions:
3.1. it shall have an unlimited liability and shall be fully owned by
Ethiopian nationals;
3.2. it shall maintain a professional indemnity insurance cover for
Birr100,000(one hundred thousand Birr);
3.3. the firm shall be organized as a General Partnership;
3.4. the chief executive officer of the firm shall:-
3.4.1. hold a diploma or above in insurance or business related
fields from an institute, a college or university acceptable to
the Bank;
3.4.2. have a minimum of eight years work experience in the
organizational units of an insurance company that directly
transact insurance business in all or several classes, of which
four years should be in managerial position.
LICENSING AND SUPERVISION OF
INSURANCE BUSINESS
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Licensing of Insurance Surveyors
Directive No. SIB/22/2002
1. ISSUING AUTHORITY
These Directives are issued by the National Bank of Ethiopia (the Bank) pursuant
to the authority vested in it by Article 41 of the Monetary and Banking
Proclamation No. 83/1994 and by Article 25 of the Licensing and Supervision of
Insurance Business Proclamation No. 86/1994.
2. DEFINITION
"Insurance Surveyor" or "Surveyor" will take the meaning given to it under
Article 14 of Proclamation No. 86/1994.
3. REQUIREMENTS
3.1 Where the applicant is a natural person, he/she:
a) has to be an Ethiopian national;
b) must not have been convicted of an offense involving dishonesty or fraud,
whether in Ethiopia or elsewhere;
c) should maintain a professional indemnity insurance cover or produce
property guarantee of Birr50,000 (Fifty Thousand Birr);
d) should at least have a diploma from a poly-technique or similar institute in
the profession he/she is applying for ; and
e) should have a diploma in insurance from recognized insurance institute
and/or at least have seven years relevant experience in insurance,
specifically, in underwriting and claims.
3.2 Where the applicant is a juridical person:
a) it shall be organized as a general partnership;
b) it shall be fully owned by Ethiopian nationals;
c) it shall maintain a professional indemnity insurance cover or produce
property guarantee of Birr50,000.- (Fifty Thousand Birr);
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d) the Chief Executive Officer of the firm:
I. should at least have diploma from poly-technique or similar
institute in the profession he/she is applying for; and
II. should have a diploma in insurance from recognized insurance
institute and/or at least seven years relevant experience in
insurance, specifically, in underwriting and claims.
4. PROHIBITIONS
An applicant for an insurance surveyor shall not have any equity interest in any
insurance company, broking firm, and loss adjusting or loss assessing firm.
5. FEES
An applicant for a license shall pay initial license and subsequent annual renewal fee
of Birr500.- (Five Hundred Birr).
6. INFORMATION REQUIRED FROM APPLICANTS
An applicant shall submit:
6.1 name and occupation (including dates and addresses of previous employment);
6.2 four passport size photographs of the applicant or the proposed Chief Executive
Office;
6.3 curriculum vitae of the applicant or the proposed Chief Executive Officer;
6.4 duly completed application form as prescribed by the Bank and enclosures
specified therein.
7. REPEAL
Dirctive No. SIB/10/1996 is hereby repealed and replaced by this Directive.
8. EFFECTIVE DATE
This Directive shall enter into force as of 1st day of June 2002.
LICENSING AND SUPERVISION OF INSURANCE BUSINESS
Directive No. SIB/24/2004
Amendment of
PROHIBITION OF ISSUANCE OF CERTIAN TYPES OF BONDS BY
INSURANCE COMPANIES
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Whereas insurance companies in Ethiopia offer Financial guarantee Bonds and other
Unconditional Bonds as one of their products to cover losses that may arise as a result of
failure of an obligor to settle in full financial obligations;
Whereas the basis on which such bonds are issued (physical collateral or financial
standing of the borrower) are not well suited to insurers to serve them as adequate safe
guards against losses;
Whereas there is no reliable and readily available reinsurance arrangement for such
bonds;
Now, therefore, in order to prevent possible losses that insurers may suffer as a result of
issuing Financial Guarantee Bonds and other Unconditional Bonds, the National Bank of
Ethiopia has issued the following directives in line with the powers vested in it by Article
42 (j) of the Licensing and Supervision of Insurance Business Proclamation No. 86/1994.
¾›=ƒÄåÁ wN?^© v”¡¾›=ƒÄåÁ wN?^© v”¡¾›=ƒÄåÁ wN?^© v”¡¾›=ƒÄåÁ wN?^© v”¡ NATIONAL BANK OF ETHIOPIA
1. Definitions
For the purpose of these directives:
1.1 "Bank" shall mean the National Bank of Ethiopia;
1.2 "Aggregate Exposure" shall mean the maximum potential financial
liability of an insurance company to beneficiaries arising from the
issuance of Financial Guarantee Bonds and Unconditional Bonds by the
insurance company;
1.3 "Financial Guarantee Bond" shall mean a bond payable on demand
issued by an insurance company obliging such insurance company to pay
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to a lending bank or another creditor or supplier all outstanding claims
arising from non-payment by principal debtor or debtors;
1.4 "Unconditional Bond" shall mean a bond other than Financial Guarantee
Bond issued by an insurance company that is payable to the beneficiary on
demand, without any pre-conditions attached to such payment.
2. Prohibition
2.1 Insurance companies are prohibited from issuing a Financial Guarantee
Bond, by whatever name it may be referred to, in any form whatsoever;
2.2 Insurance Companies are prohibited from issuing any Unconditional
Bond, by whatever name it may be referred to.
¾›=ƒÄåÁ wN?^© v”¡¾›=ƒÄåÁ wN?^© v”¡¾›=ƒÄåÁ wN?^© v”¡¾›=ƒÄåÁ wN?^© v”¡ NATIONAL BANK OF ETHIOPIA
3. Treatment of Financial Guarantee Bonds and Unconditional Bonds Issued
and Outstanding Before the effective Date of these Directives
3.1 Financial Guarantee Bonds or Unconditional Bonds issued by insurance
companies and outstanding as of the effective date of these directives shall
be withdrawn upon expiry or shall be phased out by December 31, 2005;
3.2 Notwithstanding what is stated under 3.1 herein above, Financial
Guarantee Bonds or Unconditional Bonds whose originally set expiry
dates extend beyond December 31, 2005 as of the effective date of these
directives shall be withdrawn upon expiry;
3.3 Insurance companies shall hold minimum provisions for Financial
Guarantee Bonds and/or Unconditional Bonds in the following manner:
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(a) All premiums written on Financial Guarantee Bonds and/or Unconditional
Bonds outstanding as of the end of February 2004 shall be kept as provisions
for such bonds until the phase out period for such bonds specified
under 3.1 and 3.2 herein above;
(b) All premiums that may be written as a result of renewal of Financial
Guarantee Bonds and//or Unconditional Bonds between the period end
February 2004 and end-September 2005 shall form part of the
provisions set out under (a) of this sub-article and shall be kept as
provisions until the phase out period for Financial Guarantee Bonds
and Unconditional Bonds specified under 3.1 herein above;
(c) In addition to the provisions stated under (a) and (b) of this sub-article,
insurance companies shall hold, effective end-June 2004, 5% of their
aggregate exposure as provisions until the phase out period specified
under 3.1 and 3.2 herein above:
¾›=ƒÄåÁ wN?^© v”¡¾›=ƒÄåÁ wN?^© v”¡¾›=ƒÄåÁ wN?^© v”¡¾›=ƒÄåÁ wN?^© v”¡ NATIONAL BANK OF ETHIOPIA
4. Reporting Requirements
Insurance companies shall submit to the supervision Department of the Bank a
quarterly Report, prepared in the manner as shown in the table attached to these
directives.
5. Repeal
Directive No. SIB/23/2002 is hereby repealed and replaced by these directives.
6. Effective Date
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These directives shall come into force as of the 1st day of March 2004
LICENSING AND SUPERVISION OF INSURANCE BUSINESS
INVESTMENT OF INSURANCE FUNDS
DIRECTIVE NO. SIB/25/2004
Whereas insurance companies mobilize significant financial resources predominantly in
the form of premiums on insurance polices;
Whereas a significant portion of these financial resources is usually invested by insurance
companies in income-earning assets in order to maximize profits;
Whereas such investments can be a source of financial risk for insurance companies as a
result of lack of diversification, illiquidity or adverse safety characteristics and thereby
endanger the solvency of the companies;
Whereas such adverse developments can be reduced by following prudent practices that
give due consideration to diversification, liquidity, safety of investment of insurance
funds;
Now, therefore, the National Bank of Ethiopia has issued these directives pursuant to the
authority vested in it by Article 41 of the Monetary and Banking Proclamation No.
83/1994 and Article 14 (1) of the Licensing and supervision of Insurance Business
Proclamation No. 86/1994.
¾›=ƒÄåÁ wN?^© v”¡¾›=ƒÄåÁ wN?^© v”¡¾›=ƒÄåÁ wN?^© v”¡¾›=ƒÄåÁ wN?^© v”¡ NATIONAL BANK OF ETHIOPIA
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1. Definitions
For the purpose of these directives,
1.1 "Admitted Assets" shall mean any property, security, item or interest of an
insurance company recorded in the financial statements of the insurance company
but excluding:
(b) premiums that became due to the insurer but remaining unpaid for more than
90 days except in so far as provisions are held against the premiums in the
manner as specified under article 4 of Directive No. SIB/26/2004 or in so far
as the premiums are secured under automatic non-forfeiture conditions
against the surrender value of a life assurance policy;
(c) prepaid expenses;
(d) an asset that is mortgaged or charged for the benefit of a person other than the
insurer to the extent that it is so mortgaged;
(e) intangible assets such as goodwill;
(f) unsecured or, in the opinion of the Bank, inadequately secured loans, if any;
(g) equity share in any other insurance company, if any;
(h) life policy loans in excess of the surrender value of the policy;
(i) assets in excess of limits prescribed by law or directives of the Bank.
1.2 "General Insurance" shall mean all kinds of insurance business other than
long-term insurance business;
1.3 "Long -term Insurance" shall mean insurance business of all or any of the
following classes, namely life insurance business, annuity business, pension
business, permanent health insurance business and, in relation to the insurer,
personal accident and/or sickness insurance business carried on by that insurer
as incidental to any of the businesses first named within this article.
¾›=ƒÄåÁ wN?^© v”¡¾›=ƒÄåÁ wN?^© v”¡¾›=ƒÄåÁ wN?^© v”¡¾›=ƒÄåÁ wN?^© v”¡
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NATIONAL BANK OF ETHIOPIA
1.4 "Real Estate" shall mean buildings constructed or acquired exclusively, or
predominantly, for the purpose of generating income directly and land
acquired exclusively, or predominantly, for construction or development of
facilities for the purpose of directly generating income.
2. Limits on Investment of Insurance Funds
2.1 General Insurance Funds
The General Insurance Funds of an insurance company shall be invested in the manner
prescribed hereunder:
(a) In Treasury Bills and bank deposits not less than 65% of admitted assets;
provided, however, that aggregate bank deposits (checking, savings and time
deposits) held with any one bank shall not exceed 25% of total admitted assets;
(b) In investments in company shares not exceeding 15% of total admitted assets;
(c) In real estate not exceeding 10% of total admitted assets;
(d) 10% of admitted assets in investments of the insurance company's choice.
2.2 Long-term Insurance Funds
The long-term Insurance funds of an insurance company shall be invested in the
following manner:
(b) In Treasury Bills/Bonds and bank deposits not less than, in aggregate, 50% of
total admitted assets; provided, however, that aggregated deposits (checking,
savings and time deposits) held with any one bank shall not exceed 25% of total
admitted assets;
(c) Investments in company shares not exceeding 15% of total admitted assets;
¾›=ƒÄåÁ wN?^© v”¡¾›=ƒÄåÁ wN?^© v”¡¾›=ƒÄåÁ wN?^© v”¡¾›=ƒÄåÁ wN?^© v”¡
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NATIONAL BANK OF ETHIOPIA
(d) Investments in real estate not exceeding 25% of total admitted assets;
(e) 10% of total admitted assets in investments of the insurance company's choice.
3. Compliance Period
3.1 Insurance companies shall be fully in compliance with the limits specified
under 2.1 and 2.2 herein above by the end of June 2005;
3.2 Notwithstanding what is stated under 3.1 of this article, any loans (other than
Treasury bills and Treasury Bonds) extended by insurance companies before
the effective date of these directives that exceed the limits specified under 2.1
and 2.2 herein above shall be withdrawn upon maturity.
4. Reporting Requirement
In order to monitor compliance with the investment limits specified in these directives,
insurance companies shall submit quarterly reports to the Supervision Department of the
National Bank of Ethiopia prepared in the manner as specified in the tables attached to
these directives.
5. Effective Date
These directives shall come into force as of the 1st day of March 2004.
¾›=ƒÄåÁ wN?^© v”¡¾›=ƒÄåÁ wN?^© v”¡¾›=ƒÄåÁ wN?^© v”¡¾›=ƒÄåÁ wN?^© v”¡ NATIONAL BANK OF ETHIOPIA
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Insurance Company Investments - General Insurance Business
Name of Insurer: ______________________
Date: ________________________________
Admitted Assets and Types of
Investment
Amount
(million
Birr)
Investments as
Ratio of
Admitted Assets
(%)
Bank Deposits in
a Single Bank as
Ratio of
Admitted Assets
(%)
1. Admitted Assets
xxxxxxxxxx
xxxxxxxxxx
2. Investments:
2.1 Government Securities
and Bank Deposits
2.1.1 Treasury Bills
2.1.2 Bank Deposits (Total)
2.1.2.1 Commercial Bank
of Ethiopia
2.1.2.2. Construction and Business
Bank
2.1.2.3. Awash International Bank
2.1.2.4. Dashen Bank
2.1.2.5. Bank of Abyssinia
2.1.2.6. Wegagen Bank
2.1.2.7. United Bank
2.1.2.8. Nib International Bank
2.1.2.9. Other (specify)
2.2 Others
2.2.1 Company Shares
2.2.2 Real estate
2.2.3 Others (specify)
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¾›=ƒÄåÁ wN?^© v”¡¾›=ƒÄåÁ wN?^© v”¡¾›=ƒÄåÁ wN?^© v”¡¾›=ƒÄåÁ wN?^© v”¡
NATIONAL BANK OF ETHIOPIA
Insurance Company Investments - Long-Term Insurance
Name of Insurer: _____________________
Date: ________________________
Admitted Assets and Types of
Investment
Amount (million Birr)
Investments as
Ratio of
Admitted
Assets
( %)
Bank Deposits
in a Single
Bank as Ratio
of Admitted
Assets
(%)
1. Admitted Assets xxxxxxxxxxxxx xxxxxxxxxxx
2. Investments:
2.1 Government Securities and
Bank Deposits
2.1.1 Treasury Bills
2.1.2 government Bonds
2.1.3 Bank Deposits (total)
2.1.3.1 Commercial Bank of
Ethiopia
2.1.3.2 Construction and
Business Bank
2.1.3.3 Awash International
Bank
2.1.3.4 Dashen Bank
2.1.3.5 Bank of Abyssinia
2.1.3.6 Wegagen Bank
2.1.3.7 United Bank
2.1.3.8 NIB International
Bank
2.1.3.9 Others (specify)
2.2 Others
2.2.1 Shares
2.2.2 Real Estate
2.2.3 Others (specify)
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LICENSING AND SUPERVISION OF INSURANCE BUSINESS
MANNER OF COMPUTING MARGIN OF SOLVENCY FOR INSURANCE
COMPANIES
Directive No. SIB/26/2004
1. Issuing Authority
These Directives are issued by the National Bank of Ethiopia pursuant to the
authority vested in it by Article 41 of the Monetary and Banking Proclamation
No.83/1994 and by Article 20 (4) and 42 (g) of the Licensing and Supervision of
Insurance Business proclamation No.86/1994.
2. Definitions
For the purpose of these directives,
2.1 “Admitted Assets” shall mean any property, security, item or interest of an
insurance company recorded in the financial statements of the insurance company
but excluding:
(a) Premiums that became due to the insurer but remaining unpaid for more than
90 days except in so far as provisions are held against the premiums in the
manner as specified under article 4 herein below or in so far as premiums are
secured under automatic non-forfeiture conditions against the surrender value
of a life assurance policy;
(b) Prepaid expenses;
(c) An asset that is mortgaged or charged for the benefit of a person other than the
insurer to the extent that it is so mortgaged;
(d) Intangible assets such as goodwill;
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(e) Unsecured or, in the opinion of the Bank, inadequately secured loans, if any;
(f) Equity share in any other insurance company, if any;
(g) Life policy loans in excess of the surrender value of the policy;
(h) Assets in excess of limits prescribed by law or directives of the Bank.
2.2 “Admitted Liabilities” shall mean all liabilities of an insurance company,
including but not limited to, provisions for (a) outstanding claims (b) incurred but
not reported claims (c) unearned premiums and (d) claims in dispute equivalent to
at least 15% of the aggregate claims in dispute; tax obligations, due to reinsurers,
due to ceding companies, due to other creditors, dividends declared;
2.3 “Bank” shall mean the National Bank of Ethiopia;
2.4 “Margin of Solvency” shall mean the excess of assets over liabilities to be
maintained for General Insurance Business and Long-term Insurance Business.
3. Requirements
An insurance company carrying on General Insurance Business, Long-term Insurance
Business or both shall maintain margin of solvency as specified in article 20 (1-3) of
the Insurance Business Proclamation No. 86/1994 computed in accordance with the
definition of admitted assets and admitted liabilities set out under article 2.1 and 2.2
here in above.
4. Minimum Provision Requirements for Outstanding Trade Debtors' Balances
4.1 An insurance company shall maintain the following minimum provisions for
outstanding trade debtors' balances in respect of General Insurance Business:
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(a) 25% of the trade debtors' balances outstanding for 91-180 days from the
effective date of the policy;
(b) 50% of the trade debtors' balances outstanding for 181-360 days from the
effective date of the policy;
(c) 75% of the trade debtors' balances outstanding for over 360 days from the
effective date of the policy.
4.2 Insurance companies shall set aside the minimum required provisions specified
under
4.3 here in above in a phased manner as follows:
(a) at least 50% of the required provisions by the end of June 2004;
(b) 100% of the required provisions by the end of June 2005 and thereafter.
5. Reporting Requirement
Insurance companies shall quarterly submit as attachments to their balance sheets
reports showing:
(a) Outstanding trade debtors' balances segregated into aging categories of 91-
180 days, 181-360 days and over 360 days and the amount of provisions
held against the trade debtors' balances;
(b) the asset items listed from (b) to (h) under article 2.1 herein above.
6. Effective Date
These directives shall come into force as of the 1st day of March 2004.
LICENSING AND SUPERVISION OF INSURANCE BUSINESS
Directive No. SIB/27/2004
Amendment of
FINE FOR NON-COMPLIANCE WITH THE DIRECTIVES OF THE
NATIOAL BANK OF ETHIOPIA
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1. Issuing Authority
These directives are issued by the National Bank of Ethiopia pursuant to the authority
vested in it by Article 41 of the Monetary and Banking Proclamation No. 83/1994 and
Article 26(4) (d) of the Licensing and Supervision of Insurance Business
Proclamation No. 86/1994.
2. Penalties for Non-compliance
2.1 Any insurance company that fails to comply with the requirements of any of the
directives of the National Bank of Ethiopia shall be subject to a fine of birr 10,000
for each violation;
2.2 Any insurance company that fails to pay to the National Bank of Ethiopia the fine
stated under 2.1 herein above within 5 (five) working days from the date of
receipt of the letter of the National Bank of Ethiopia notifying the concerned
insurance company of the imposition of a fine shall be subject to an additional
penalty of birr200 (two hundred birr) for each day the fine remains outstanding;
2.3 The National Bank of Ethiopia may, in addition to the penalties indicated under
2.1 and 2.2 herein above, take any other measure it considers necessary.
3 Waiver
The National Bank of Ethiopia may waive the penalties on grounds it considers to be
justified.
4 Repeal
Directive No. SIB/14/96 is hereby repealed and replaced by these directives.
5. Effective Date
These directives shall come into force as of the 1st day of March 2004.
LICENSING AND SUPERVISION OF INSURANCE BUSINESS
EMERGENCY TRAVEL HEALTH INSURANCE
Directive No. SIB/28/2004
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Whereas, the Schengen States of Europe have decided that foreigners planning to travel
to these states shall produce an Emergency Travel Health Insurance Policy as part of the
requirements to obtain entry visa of these states;
Whereas, the Bank is cognizant of the fact that free movement of Ethiopian nationals to
Schengen States should not be hindered by the decision of the States;
Now, therefore, the Bank has issued these directives pursuant to the authority vested in it
by Article 41 of the Monetary and Banking Proclamation No. 83/1994 and Article 8 of
the Licensing and Supervision of Insurance Business Proclamation No. 86/1994.
1. Definition
1.1 Emergency Travel Health Insurance: for the purpose of these directives shall
mean a policy which is not a general health insurance, and which covers medical
treatment for acute emergencies while the person is in Schengen States, return
transport of the patient and transfer of body in case of death while being in
Schengen States on short term travel.
1.2 Commission: for the purpose of these directives is a receipt of money by a local
insurer, which is licensed under the Licensing and Supervision of Insurance
Business Proclamation No. 86/1994, for services it renders as a commission agent
by selling Emergency Travel Health Insurance Policy of a Schengen State Insurer.
1.3 Schengen States: The Schengen States include Austria, Belgium, France,
Germany, Greece, Italy, Island, Denmark, Finland, Norway, Sweden, Luxemburg,
Nederland, Portugal, Spain and other states of Europe whose membership to the
Schengen States in the future shall be proven by the participating insurers;
1.4 Bank: Shall mean the National Bank of Ethiopia.
2. Special Permission
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2.1. An insurance company that is licensed in accordance with the Ethiopian
law is here by permitted to develop and issue its own Emergency Travel Health
Insurance Policy or to act as an agent of an insurer licensed by or registered in
a Schengen State to sell, the latter insurer’s Emergency Travel Health
Insurance Policy, on commission basis, to Ethiopian nationals who travel to
these States for short stay.
2.2. The Ethiopian insurance company entering into an agency agreement with the
said Schengen State insurer shall maintain appropriate documentation with
respect to the licensing or registration of the insurer in a Schengen State and the
terms and conditions of the agency agreement and make such documents
available for inspection to the Bank.
2.3. The Ethiopian Insurance Company involved in developing and issuing its own
Emergency Travel Health Insurance Policy shall submit to NBE its policy
forms, premium rates and Reinsurance Treaties (if any) for same.
3. Prohibition
No other person, organization, including all insurance intermediaries shall be
permitted to act as an agent of the registered insurance company of a Schengen
State to sell Emergency Travel Health Insurance Policy to Ethiopian nationals on
commission basis or otherwise.
4. Effective Date
These directives shall come into force as of the 6th
day of December 2004.
LICENSING AND SUPERVISION OF INSURANCE BUSINESS
LICENSING OF INSURNACE BROKER
DIRECTIVE NO. SIB/28/2004
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1. ISSUING AUTHORITY
These directives are issued by the National Bank of Ethiopia pursuant to the
authority vested in it by Article 41 of the Monetary and Banking Proclamation
No. 83/1994 and by Article 25 and 42(J) of the Licensing and Supervision of
Insurance Business Proclamation No. 86/1994.
2. DEFINITION.
2.1. Trader shall take the meaning given to it under Article 5(19) of the
Commercial Code of Ethiopia.
2.2. Business organization shall have the meaning specified to it under
Article 210 of the Commercial Code of Ethiopia.
2.3. Commercial Business Organizations shall have the meanings and
interpretations provided to them under Article 213(1&2) of the
Commercial Code of Ethiopia.
2.4. Commercial Broker shall have the meaning specified under Article 56(1&2) of
the Commercial Code of Ethiopia.
2.5. Insurance Broker shall take the meaning given to it under Article 2(11)
of Proclamation No. 86/1994.
2.6. “The Bank” Shall mean the National Bank of Ethiopia.
2.7. “Managerial Position” for the purpose of these directives shall mean the
position of an insurance company branch manager or above that involves
directly transacting insurance business in all or several classes.
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2.8. Organizational Units of an insurance company that directly transact insurance
business for the purpose of these directives shall mean the operational
units of an insurance company that mainly consist of an underwriting and
claims departments or divisions as the case may be.
3. FORM OF ESTABLISHMENT.
An Insurance Broker can be established in any form subject to compliance with any
provisions of the Commercial Code of Ethiopia, Licensing and supervision of
Insurance Business Proclamation No. 86/1994 and this Directive.
4. GENERAL REQUIREMENTS.
In order to be licensed as a broker, the applicant shall meet the following
conditions:
4.1 The applicant should be an Ethiopian national or a business organization
fully owned by Ethiopian nationals.
4.2 The chief executive officer of the firm shall: -
4.2.1 have at least a diploma in insurance or business related field
from an institute, a college or university acceptable to the Bank;
4.2.2. have a minimum of eight years work experience in the
organizational units of an insurance company that directly transact
insurance business in all or several classes, of which four years
should be in managerial position;
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4.3 An applicant for an insurance broker license shall not have any equity
interest in any insurance company or loss-adjusting firm.
5. CAPITAL.
An applicant for a broking firm under the form of Private Limited Company (PLC) or
Share Company (S.C) shall comply with the capital requirements of the Commercial
Code of Ethiopia.
6. PROFESSIONAL INDEMINTY.
6.1. Individual Brokers and Broking firms to be established under a form
of business organization whose liability is set to be unlimited by the
Commercial Code shall maintain a Professional Indemnity Insurance
Policy of birr100, 000 (one hundred thousand);
6.2. A Broking firm to be established under a form of business organization whose
liability is set to be limited by the Commercial Code shall maintain a
Professional Indemnity Insurance Policy of birr500, 000 (five hundred
thousand);
6.3. The benefits of the professional Indemnity Insurance Policy stated under sub-
articles 6.1 and 6.2 can only be claimed by policy holders or prospective
policy holders who sustained damage due to the professional negligence of
a broker subject to court award and after utilization of all other resources
of the broker.
7. FEES.
7.1. An applicant for a broker license shall pay initial license and subsequent annual
renewal fee of birr500. (birr five hundred).
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8. PENALTY.
8.1. An insurance broker that fails to comply with any of the Bank’s directives,
any of the provisions of the Licensing and Supervision of Insurance
Business Proclamation No. 86/1994 and/or the Commercial Code of
Ethiopia shall be subject to: -
8.1.1. a fine of Birr1,000 (birr one thousand) with written warning for
the first time and;
8.1.2. cancellation of the license upon failure to pay the fine stated
under sub-article 8.1.1 herein above within the specified time and
upon violation of any of the directive of the Bank and provisions of the
Proclamation and the Commercial Code for the second time.
9. INFORMATION REQUIRED FROM THE APPLICANT.
9.1. Evidence of paid up capital;
9.2. Professional indemnity Insurance Policy;
9.3. Names and occupation (including dates of previous employment) of
founders;
9.4. Four (4) photographs of the proposed manager.
9.5. Curriculum vitae of the proposed manager.
9.6. Duly completed application form as prescribed by the Bank and
submission of enclosures specified therein.
9.7. Memorandum