LICENSING AND SUPERVISION OF INSURANCE BUSINESS

Motor Insurance Minimum Premium Rate
Directive No. SIB/60/2023

Whereas, insurance premium should be commensurate with a risk proposed for insurance;

Whereas, it is important to ensure that premium rates are adequate, fair and sufficient;

Whereas, it becomes necessary to culminate the unwarranted premium undercutting, ensure the stability of the insurance industry and protect the interest of policyholders;

Now, therefore, in accordance with Articles 58 and 64(2) of Insurance Business Proclamation No. 746/2012, as amended by Insurance Business (Amendment) Proclamation No.1163/2019, the National Bank of Ethiopia has hereby issued this Directive.

1. Short Title
This Directive may be cited as "Motor Insurance Minimum Premium Rate Directive No. SIB/60/2023".

2. Definitions
In this Directive, unless the context provides otherwise:

2.1. "insurance company" means a company licensed by the National Bank to undertake insurance business or an insurance company owned by the Government;

2.2. "minimum premium rate" means the rate of motor insurance premium net of all discounts and rebates that would be applied on the sum insured;

2.3. "National Bank" means the National Bank of Ethiopia;

2.4. "own damage motor insurance" means a motor insurance policy that covers vehicles against loss or damage; and

2.5. "premium" means the amount of money an insurance company charges to provide the coverage described in an insurance policy.

3. Scope of Application
This Directive shall apply to all insurance companies.

4. Specific Requirements
4.1. The own damage motor insurance minimum premium rate applicable to all categories of motor vehicles shall be as per the following table.

No.	Category	Minimum Rate in %
4.1.1	Motor Private
4.1.1.1	Private vehicles	1.01
4.1.1.2	Motor cycles	1.14
4.1.2	Motor Commercial
4.1.2.1	Goods Carrying
4.1.2.1.1	Own Goods	1.09
4.1.2.1.2	Pick-ups	1.12
4.1.2.1.3	Truck & truck trailers and water tanker	1.25
4.1.2.1.4	Tipper	1.39
4.1.2.1.5	Tankers
4.1.2.2	General Cartage
4.1.2.2.1	Pick-ups	1.36
4.1.2.2.2	Truck & truck trailers and water tanker	1.29
4.1.2.2.3	Tipper	1.43
4.1.2.2.4	Tankers	1.60
4.1.2.3	Passengers
4.1.2.3.1	Own service	1.30
4.1.2.3.2	Public Service (fair paying)
4.1.2.3.2.1	Seat up to 16	2.86
4.1.2.3.2.2	Seat between 17-30	1.80
4.1.2.3.2.3	Seat above 30	1.74
4.1.2.3.2.4	Taxi	1.77
4.1.2.4	Car hire	1.58
4.1.2.5	Three wheelers and tri cycles	1.70
4.1.2.6	Agricultural vehicles	0.58

4.2. Charging premiums below the minimum premium rates indicated under sub-article 4.1 of this Article shall not be allowed and shall constitute a breach of this Directive.

4.3. The minimum premium rates under sub-article 4.1 of this Article shall be flat rates and apply to the respective categories of vehicles.

4.4. Any alteration or change made to motor insurance premium rates in December 2022 shall be null and void.

4.5. Every insurance company shall submit to the National Bank its own motor insurance premium rate as specified under Article 47 of Insurance Business Proclamation No. 746/2012, as amended by Insurance Business (Amendment) Proclamation No. 1163/2019 within one month from the effective date of this Directive.

5. Penalty
An insurance company that charges premiums below the minimum premium rates stipulated under sub-article 4.1 of Article 4 shall be penalized Birr 25,000.- (twenty five thousand Birr) for each breach.

6. Effective Date
This Directive shall enter into force as of the 24th day of August 2023.

Mamo Esmelealem Mihretu
Governor