PROCLAMATION No. 1163/2019
A PROCLAMATION TO AMEND INSURANCE BUSINESS PROCLAMATION
WHEREAS, it has become necessary to amend the Insurance Business Proclamation No.746/2012;
NOW, THEEFORE, in accordance with Article 55 (1) of the Constitution of the Federal Democratic
Republic of Ethiopia, it is hereby proclaimed as follows:
- Short Title
This Proclamation may by cited as “Insurance Business (Amendment) Proclamation No. 1163/2019.”
The Insurance Business Proclamation No.746/2012 is hereby amended as follows.
1/ Sub Article (8) and (12) of Article 2 of the Proclamation are deleted and replaced by the following new Sub Articles (8) and (12):
8/ “company” means a share company as defined under the Commercial Code, the capital of which is owned fully by Ethiopian nationals or foreign nationals of Ethiopian origin or jointly owned by Ethiopian nationals and foreign nationals of Ethiopian origin, or organizations owned fully by Ethiopian nationals or foreign nationals of Ethiopian origin or jointly owned by Ethiopian nationals and foreign nationals of Ethiopian origin,
12/ ‘‘financial institution” means an insurance company, a bank, a micro
finance institution, a capital goods finance company, a reinsurer, a micro insurance
provider, postal savings, money transfer institution, digital financial service
provider or such other institution as determined by the National Bank;”
2/ The following new Sub-Articles (38, 39, 40,
41, 42, 43, 44, 45, and 46) are added after Sub Article (37) of Article 2 of
the Proclamation, and the subsequent Sub- Articles (38) to (40) are renumbered as
Sub Articles (47) to (49), respectively:
38/ “digital financial service” means financial services including payments, remittances and
insurance accessed and delivered through digital channels;”
39/ “takaful” means a cooperation between members of a community whereby each member undertakes to contribute a certain sum of money to a fund which will be used
mutually to assist the members against a defined loss or damage;
40/ “foreign national of Ethiopian origin” means a foreign national of Ethiopian origin
as defined under Proclamation No. 270/2002 Providing Foreign Nationals of Ethiopian Origin with Certain Rights to be Exercised in their Country of Origin;”
41/ “insurance company” means a company licensed by the National Bank to undertake insurance business or an insurance company owned by the Government;”
42/ “micro insurance” means any form of protection against risks that is designed for
and accessed by low-income people, provided by different categories of carriers but
operating on basic principles of insurance and funded by premiums;”
43/ “micro insurance agent” means a person licensed by the National Bank as a micro insurance agent who, acts for and on behalf of one or more micro insurance providers, and engages in intermediary services;”
44/ “micro insurance providers” means insurers, including those dedicated to deal in micro insurance business and microfinance institutions;”
45/ “premium” means the amount of money an insurer charges to provide the coverage described in an insurance policy;”
46/ ‘‘margin of solvency” means the excess of admitted assets over admitted
liabilities to be maintained for each main class of insurance business;”
3/ The following new Sub Article (10) is added after Sub Article (9) of Article 5 of
10/ “The National Bank may issue a directive prescribing the manner of
licensing and supervising micro insurance provider and micro insurance agent.”
4 / Article 10 of the Proclamation is deleted and replaced by the following new article
10/ Manner of participation of a Foreign National of Ethiopian Origin in an
Insurance Business Without Prejudice to the prohibition laid down under Sub Article (5) of Article 16 of the proclamation,
1) “A foreign national of Ethiopian origin or an organization owned fully by foreign nationals
of Ethiopian origin or jointly by foreign nationals of Ethiopian origin and Ethiopian
nationals are allowed to acquire the shares of Ethiopian insurer or to open an insurance company;
2) If a foreign national of Ethiopian origin holds a share directly in an insurance
company or indirectly by holding a share in another organization that holds a share in an insurance company, in accordance with the
provisions of Sub-Article (1) of this Article, a foreign national of Ethiopian
origin or the organization to which he is a shareholder, shall pay the values of the
shares in an insurance company only in an acceptable foreign currency;
3) Notwithstanding the provisions of Sub- Article (2) of this Article, all types of
payments due to a foreign national of Ethiopian origin resulting from;
- a) dividends earned from a share in an insurance company;
- b) transfer of shares in an insurance company;
- c) sales or liquidation of an insurance company; or
- d) any other matters related to shareholding in an insurance
company; shall be paid to him in a local currency, i.e. Birr; meanwhile, he may not be allowed to
repatriate any asset or interest obtained in this manner.
4) The National Bank may issue directive related to additional conditions for
investment in an insurance company by foreign nationals of Ethiopian origin.”
5/ Sub Article (5) of Article 12 of the Proclamation is repealed.
6/ Paragraph (c) of Sub Article (4) of Article 15 of the Proclamation is deleted and
replaced by new paragraph (c);
- c) “the duties and responsibilities of board of directors and manner of corporate
governance of an insurance company;”
7/ Sub Article (3) of Article 16 of the Proclamation is deleted and replaced by the
following new Sub Article (3) and new Sub Article (5) is added after sub Article (4):
3) “A director of an insurer may not, at the same time, serve as a director of another financial institution. Moreover, a business entity or a company in which such director has ten percent and more equity interest may not serve as a director of an insurer.”
5) “Foreign nationals or organizations fully or partially owned by foreign nationals
may not be allowed to open an insurance company or carry on insurance business or operate branch offices or subsidiaries of foreign insurers in Ethiopia or
acquire the shares of Ethiopian insurers.”
8/ Sub Article (1) of Article 26 of the Proclamation is repealed.
9/ Sub Article of (1) Article 30 of the Proclamation is repealed.
10 Sub Article (1) of Article 46 of the Proclamation is deleted and replaced by the
following new Sub-Article (1):
1/ “Unless otherwise provided by regulations or directives issued pursuant
to this Proclamation, no insurer may grant any loan or financial
guarantee, except employment benefits allowed to all employees of an insurer or
loans on life policies issued by him within their surrender value, to any director,
shareholder, chief executive officer, auditor, actuary or to any insurance auxiliary or
to any other person connected with such persons.”
11/ The following new Articles (55, 56, 57,
58, 59, 60) are added after Article 54 of the Proclamation and the subsequent Articles 55 to 60 are renumbered as Articles 61 to 66, respectively .
- Supervision of A Reinsurer
1/ The National Bank shall supervise a reinsurer.
2/ The National Bank shall issue directive necessary to supervise a reinsurer.
3/ All Articles of this Proclamation are applicable to a reinsurer licensed under the
Proclamation except Articles 6 (2-5), 27 (3), 34 (2), 39-
45, 48-50, 58 and 59 (as amended).
- Digital Insurance Services
Minimum conditions to provide digital insurance services shall be determined
by a National Bank directive.
- Regulation of Advertisement
The National Bank may at any time direct an insurer to withdraw, amend or refrain from issuing a paid radio or television announcement, a poster , billboard, brochure,
circular, or other document, and a paid advertisement in a regularly published
newspaper or magazine that it considers to be false, misleading, deceptive, or offensive.
- Determining Insurance Premium
The National Bank may determine an economic (minimum) premium rate in a manner to be specified by a directive.
- Insurance Services Consumer Protection
The National Bank may issue directive for protecting the right and interest of
insurance service consumers.
- Licensing and Supervision of A Takaful Insurance Company
1/ Without prejudice to the requirements specified under the provisions of the
Proclamation and directive the National Bank shall issue directive to prescribe additional conditions for the licensing and supervision of a takaful insurance company.
2/ without prejudice to Sub-Article (1) of this Article, the National Bank may
issue directive to regulate takaful insurance carried on alongside a
conventional insurance business.
- Effective Date
This Proclamation shall come into force on the date of publication in the Federal Negarit Gazette.
Done at Addis Ababa, this 9th day of January 2020
PRESIDENT OF THE FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIA