Introduction
On September 15, 2022, the National Bank of Ethiopia issued Directive No. SIB 57/2022 on Minimum Paid-up Capital for Insurance Company (the Directive) which replaces Minimum Paid-up capital for Insurers Directive Number 34/2013.
- Increased Minimum Paid-up Capital Requirement
- General Insurance License
A general insurance license now requires 400 million birr as the minimum paid-up capital, which must be put in a blocked account in the insurer’s name and fully paid up in cash. Previously, the minimum paid-up capital requirement was 60 million birr.
- Long Term Insurance License
A long term insurance license now requires a minimum paid-up capital of 100 million birr, up from the previous minimum of 15 million birr, all of which must be put in a blocked account in the name of the insurer.
- General and Long Term Insurance License
The minimum paid-up capital required to obtain both general and long-term insurance license has been raised from 75 million birr to 500 million birr and ought to be fully paid up in cash and deposited in a blocked account in the name of the insurer to be established.
Existing insurance companies whose paid-up capital falls below the minimum requirement must increase their capital by 30 June 2027, and submit an action plan detailing how the minimum requirement will be met within 30 days of the Directive’s effective date.
The new directive permits an insurance company to receive a license if it raises 60 million birr for general insurance, 15 million birr for long-term insurance, or 75 million birr for both within a year of the directive’s effective date. Nonetheless, the new minimum paid-up capital requirement must be met by the insurance company, within seven years of the start of the insurance business.