Abstract:
Though, the insurance industry is one of the most instrumental means to assist Ethiopia to
achieve its macroeconomic stability and growth objectives, the Ethiopian insurance business
proclamation highly restricted shareholding ownership on insurance company. However, once
again coupled with the severe restriction of maximum holding at five percent, the rationality of
this restriction may be questioned. As comparative study shows, limiting ownership by 5% of the
subscribed capital of insurance is too strict. This affects the capital mobilization capacity of
insurance in particular when viewed in relation to prohibition of an influential shareholder not
to invest in other insurance companies. This intern directly affects the efficiency and competitive
advantage of insurances and this needs some relaxation.
As part of a concluding remark, strict regulation including in the area of shareholding
ownership in insurance and by insurance puts insurance at disadvantage and the country’s
policy should be reviewed so as to minimize restrictions and address adverse concerns by
scaling up its regulatory capacity
