Mesfin abera risk management mini projec

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1. COURSE TITLE: RISK MANAGEMENT OPERATION OF INSURANCE BUSINESS IN ETHIOPIA Mine project of insurance operation of insurance business in case of awash insurance company By [email protected]

2. Introduction 1.1. General Objective: The general objective of this study is to examine the overall operations of Awash Insurance Company in Ethiopia, identify the challenges encountered by the company in the insurance business and recommend possible strategies for improvement. 1.2 Specific Objectives: To analyze the insurance products offered by Awash Insurance Company and their market acceptability.
To examine the claim settlement process of Awash Insurance Company and identify the factors that affects the efficiency and effectiveness of the process.
To assess the performance of Awash Insurance Company in terms of profitability, growth, and market share in the Ethiopian insurance industry.
To identify the key challenges that the company faces in its operations, such as regulatory compliance, competition, and changes in customer preferences.
To provide recommendations for Awash Insurance Company to improve its operations and enhance its competitiveness, such as diversifying its product portfolio, improving customer service, and investing in technology and innovation.

3. Definitions of Insurance Insurance can be defined from economic, legal, business and social point of views.
In Economic Sense, insurance is a mechanism of providing certainty or predictability of loss With regard to pure risk. It accomplishes these by policy or charity of risk. By reducing uncertainty in the business environment, it will create peace of mind that enables businessmen
Focus on their primary activities instead of worrying about the existence of possibility of loss
So that societies can grow more.
From Legal Point of View, insurance is a contract whereby, a consideration (price) paid to a
Party adequate to the risk, becomes security to the other that he shall not suffer loss, damage
or prejudice by the happening of risks specified in the contract for which he may be exposed to. From Business Perspective insurance is defined as a cooperative device to spread the loss caused by a particular risk over a number of persons who are exposed to and who agree to
Ensure them against that risk.

4. Legal foundation ) 2.2 Minimum Paid - Up Capital Requirements The minimum paid - up capital required to obtain a general insurance business license shall be Birr 400 million ( four hundred million Birr ) , which ought to be fully paid - up in cash and deposited in blocked bank account ( s ) in the name of the insurance company to be established .
The minimum paid - up capital required to obtain a long - term insurance business license shall be Birr 100 million ( one hundred million Birr ) ,which ought to be fully paid - up in cash and deposited in blocked bank account ( s ) in the name of the insurance company to be established .
The minimum paid - up capital required to obtain both general and long term insurance businesses license shall be Birr 500 million ( five hundred million Birr ) , which ought to be fully paid - up in cash and deposited in blocked bank account ( s ) in the name of the insurance company to be established .

5. 2.3 Proclamation No. 746/2012.
Proclamation to Provide .1 Licensing Insurance Business
Requirement for Obtaining License
1/ It is prohibited to transact insurance business in Ethiopia without obtaining and insurance business license from the National Bank.
2/ No person may use the word ‘‘insurance’’ or ‘‘insurer’’ or its derivatives as part of the name of any financial business unless it has secured a license from the National Bank.
3/ Without the prior written approval of the National Bank, no insurer may:
a) Carry on insurance business at any place other than that authorized by the National Bank, or closes an existing place of business;
b) Introduce new insurance products;
c) Merge with or takeover the business of another insurer;
d) Alter the name under which it is licensed to carry on insurance business.
2.3.2 Conditions of Licensing

6. Legal foundation 2.3.2 Conditions of Licensing
1/ the following conditions shall be fulfilled to secure an insurance business license:
a) A duly completed application in the prescribed format together with other accompanying documents as may be specified by directive shall be submitted;
b) An investigation fee, as specified by the National Bank, shall be paid at the time of submitting the application;
c) upon filing the application with the National Bank, the founders shall, at least once a week for a period of four consecutive weeks, publish, in a form prescribed by the National Bank, a notice of intention to engage in insurance business in widely circulating
Newspapers;
d) The insurer shall be formed as a company and its memorandum and articles of association shall be approved by the National Bank before registration with the appropriate government organ;
e) The minimum paid-up capital prescribed by the National Bank shall be paid in cash and deposited in a blocked bank account in the name of the prospective insurer;

7. Legal foundation .3.3 Issuance of License
1/ After evaluating all the relevant information, the National Bank may decide to issue a license to an applicant, with or without conditions or limitations, if it is satisfied that the requirements for a license have been met.
2/ the conditions or limitations to which a license shall be subject may, among others, include:
a) Limitation on the class of insurance that may be written;
b) Limitation on the validity period of the license;
c) Limitation on the amount of premium that may be written in a particular period or Class of insurance;
2/ The National Bank shall decide on an application to carry on insurance business within 90 days from the last date of receipt of all information to be submitted in accordance with sub-article (1) of Article 4 of this Proclamation.

8. DISCUSSION Historical Overview The historic establishment of Awash began in October 1, 1994, with 456 shareholders and Birr 4.8M in paid-up capital.
Commenced Operation: January 2, 1995
Within the first year alone, average return on Paid up capital rose to 20% and subsequently, GWP showed steady growth over the period.
1997 – 1999
Awash grew its capital from Birr 4.8M to Birr 15M and captured around 8% of market share of the total Insurance Market in Ethiopia. Paid up capital rose to almost Birr 20M
2000 – 2003
In the new millennium, Awash diversified its produces through the introduction of life services. With a growing number of staff and branches, net profit before tax reached over 10 M as well as portfolio investment.
2004 – 2008
The period was brought in through awash’s 10 – year anniversary which was colorfully celebrated and was followed with the preparation of the first strategic plan covering the period between 2007 and 2011.

9. Stakeholders of Insurance Business There are several stakeholders in the insurance business in Ethiopia, and their roles are as follows: 1 insurer: 2 reinsurer: 3 regulators: 4 customers: 5 Agent and brokers: 6 employee: 7 investors:

10. Type of Insurance Products General insurance Motor compressive Burglary Fire and lighting Consequential Marine inland Carriers All risk Engineering In Dilla branch the product service are Fire and lighting Motor and compressive and other

11. Life and health Awash Insurance Company(S.C) transacts Life and Health Insurance as follows:
Term Assurance:
Individual &
Group Life;
Endowment Assurances:
10, 15, 20...35 Years Endowment,
Anticipated Endowment,
Endowment Annuity &
Education policy
Whole Life (Endowment at age 85);
Riders:
Accident Insurances:
Supplementary Accident Insurance (SAI)
Comprehensive Accident Insurance (CAI)
Waiver of Premium
Medical Expenses Insurance
Travelers' Health Insurance
Mortgage Redemption Insurance (MRI)

12. Travel insurance Awash Insurance Company(S.C) provides travel insurance cover to different Geographical areas.

1. Travel Protect Plans
Africa : provides coverage within Africa and surrounding islands, except country of residence.
Asia : provides coverage within Asia & surrounding islands.
Israel : provides coverage within the State of Israel.
Europe : all European countries including those in the Schengen Area.
Worldwide : provides Worldwide cover except the country of residence.
2. Students Travel Protect Plans
Europe : all European countries; Schengen Area included.
Worldwide: provides Worldwide cover except the country of residence.
3. Haji &Umrah Travel Insurance
Haji &Umrah: provides coverage in Medina and Mecca located in Saudi Arabia.
4. "Corporate" Plan
Worldwide: provides worldwide cover except the country of residence.
One Year BLANKET Policy :several employees with 30 or more people constantly travelling throughout the year can be covered during the validity of the policy for journeys declared before its commencement. Travelling days covered will be deducted of the daily plan contracted by the policyholder.

13. Current liabilities 1.1.2. Finance and Accounting Conceptually speaking, the relationship between finance and accounting has two dimensions (i) they are closely related to the extent that accounting is an important input in financial decision making and (ii) there are key differences in view point between them. Accounting function is a necessary input in to the finance function. That is accounting is a sub function of finance. Accounting generates information/ data relating to operations/ activities of the firm. The end product of accounting constitutes financial statements such as the balance sheet, the income statement, and the changes in financial position/ sources and uses of funds statement/ cash flow statement. The information contained in these statements and reports assists financial managers in assessing past performance and future directions of the firm and in meeting legal obligation such as payment of taxes and so on. Thus, accounting and finance are functionally closely related. But there are two key differences between finance and accounting_x0000_