United Insurance SC (UNIC) became the first insurer to have Funeral Insurance Cover as a separate insurance policy starting from July 1, 2014, following the approval from the National Bank of Ethiopia (NBE).
The new funeral policy allows the company to provide 10,000 Br to 30,000 Br insurance cover for funeral costs upon the death of the insured. The cover does not include grandparents, grand children, brothers, sisters, unlces and aunts. Outside that any or all of the people in the family, including parents, spouses, and children.
"We will only cover the funeral cost of the client's family who lives with the client and it will be provided only for clients living in Addis Abeba," said Azaleche Yirgu, deputy general manger of life and medexin at United.
The funeral insurance has similarity with the Ethiopian traditional trend called Idir, which is an association established among neighbours or workers to raise funds that will be used during emergencies, such as death within these groups and their families.
An individual can buy an insurance ranging from minimum initial cover of 10,000 Br to maximum initial cover of 30,000 Br based on the interest of the client. The client will buy policies separately for all members of the family. Once clients bought the policy, they will pay annual premium ranging from 30 Br for babies and 500 Br for old aged people.
"The payment will be done within 12 to 48 hours the death of the client or on his families occurred ," said Azaleche.
According to Zafu Eyesusework Zafu, board member of the Insurance Company, the system is the first policy which separates funeral insurance from accident insurance cover practiced by the existing insurance system - the latter lumps together accident and damage cost.
United, which is under Meseret Bezabih leadership, was established by 87 shareholders back in November 1994 with an authorised capital of 25 million Br and an initial paid up capital of eight million Br. Following the merger with the former Lion Insurance SC. in 2002, the company is currently owned by 318 shareholders with an authorised capital of 250 million Br and a subscribed capital of 100 million Br.
"Our major market targets are adults who reside at condominiums and apartments," Azalech said.
The other target areas are civil servants who do not have an exposure for social life and the widely practiced trend Idir, she said.
The Company expects to have 827,655 Br profit in its first year of the implementation, 230,264 Br in the following year and to reach to 5.2 million Br in the third year of implementation, with expectation of more insurance cover and less premium affecting the second year.
Funeral Insurance, falling in the category of Life, is highly practiced in South Africa, where, according to some data, 49.7pc of adults having the cover.
The Company hired additional three workers for this new insurance system and is ready to launch selling the insurance, according to Azalech.
Currently, in Ethiopia, one state-owned and 16 private insurance companies are functional with a total asset of 7.8 billion Br, of which 1.74 billion Br is a paid up capital until March 2014. The insurance companies also have a premium capital of 2.76 billion Br. The 17 insurers earned 300 million Br profit during the nine month of the current fiscal year 2013/14, according to the report of NBE on March 2014