The organising committee for the establishment of the Ethiopian Reinsurance S.C is to hire Diligence Consultancy Service Plc to run the project office in an agreement expected to be signed on Wednesday May 6, 2015.
The project office will work on the business plan, pre-application forms, job descriptions, articles of association, salary scales, preparation of policies and manuals, licence applications, underwriting procedures as well as claims and human resource manuals.
Diligence Consultancy Service Plc is owned and managed by Tewodros Tilahun. When the organising committee contacted Diligence for the work, it made a condition that two other insurance veterans would work with it on the project, said Kiros Jiranie, chairperson of the committee. Tewodros was the managing director of the Ethiopian Insurance Corporation (EIC) for six years, and for three years before that, the deputy managing director for finance and investment at the same company. The other two are Hailemichael Kumsa, who worked as deputy managing director of operations at Africa Re – a reinsurance company established by African governments; and Teshome Beyene, Ethio Life & General Insurance S.C board chairman.
The organising committee is composed of 15 members from the insurance and the banking sector. The reinsurance company, yet to be established, now has 14 subscribed shareholders of which 13 are members of the Association of Ethiopian Insurers and one is out of the Association’s membership.
There are 17 insurance companies in the country, among which only four are not members of the Insurer’s Association.
The organising committee has a budget of 10 million Birr, which is one percent of the billion Birr subscribed capital, to expedite the establishment process.
“The project management consultants will finish their job in six months and the reinsurance company will officially begin operation by that time,” Kiros told Fortune.
But the owner and manager of Diligence, Tewodros Tilahun, did not want to comment on the issue when Fortune contacted him through a phone call.
“I do not have anything to say about that; I do not know anything,” he said.
The establishment of the local reinsurance company was initiated by a new directive issued by the National Bank of Ethiopia (NBE) in April 2014, after which the Association of Ethiopian insurers began organizing its members to form the first insurance company in the country.
The directive by NBE dictates that a reinsurance company established in the country should have a subscribed capital of one billion Birr while the paid-up capital is 500 million Birr.
Reinsurance, which is also known as “insurance for insurers” or “stop-loss insurance”, is the practice of insurers in which they transfer portions of risk portfolios to third party insurers through an agreement in order to lower the probability of having to pay large sums resulting from an insurance claim.
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