Determinants of non-life insurance business development in Ethiopia

Abstract

This study examines the macro-economic and firm-specific determinants of non-life insurance business development in Ethiopia. As a result, this study adopts the Explanatory research type to meet the objective of the study. Panel Data collected from the National Bank of Ethiopia (NBE) and twelve non-life insurance businesses operating in Ethiopia from the period 2010-2019.The researcher used purposive sampling techniques and quantitative research approach. The study adopted random effect regression model was employed to analyse the panel data of the study by using the stata16 version. The finding of this study was financial development, firm sizes, Premium growth have a positives and statistically significant at 1% level of confidence with (non-life) general insurance business in Ethiopia measured by gross written premium. Underwriting risk has a negative and statistically significant with (non-life) general insurance business in Ethiopia at 1% level of confidence. On the other hand, the remaining three variables- Gross domestic product growth and trade openness have a positive and insignificant at 5% level of confidence. Leverage ratio (LR) a negative and statistically insignificant influence on non-life insurance business developments. The study suggests that general insurance companies and other participants of the general insurance industry should have more considered premium growth, firm size, financial development, and underwriting risk toward enhancing the level of the country's non-life insurance business development.