Abstract:
Ethiopian Insurance Companies existed for the very reason of servicing Policyholders. Without
Policyholders, it is unimaginable for insurers to exist as an organization. This research paper helps
professionals and government bodies to give attention to factors affecting Policyholders retention in
insurance sector. Thus, this paper focused on selected predictors for retaining policyholders, namely
competition, bonds, claims handling, underwriting strategies and intermediaries’ role. The research
design that was adapted in this paper is explanatory where primary data was used. Questionnaire of
Likert scale was distributed to 171 branch representatives, out of which 149 questionnaires was returned.
The researcher used inferential analysis method using SPSS version 20. The correlation analysis result
indicated that competition is significantly negative and very strongly correlated with Policyholders
retention while personal-social bond, claims handling, underwriting practices and intermediaries’ role
have significantly positive strong relationship with retention. The regression analysis revealed that, there
is no significant relationship between intermediaries and Policyholders retention and also personalsocial bond and retention of Ethiopian Insurance companies. The study thus recommends a healthy
business competition and minimum price should be fixed to promote healthy competition. Besides,
insurance companies should improve efficient claims handling, enhanced underwriting and selling
policies using technologies in order to increase retention rates up to the target margin.
