Assessment of Performance of Motor Insurance: A Case of Ethiopian Insurance Corporation

Abstract

The business world without insurance is unsustainable. At the same time, an Insurance companies’ ability to continue to cover risk in the economy hinges on their capacity to create profit or value for their shareholders. It is in the interest of every insurer to identify the critical factors that determine business and product performance. This research set out with an objective of identifying factors that affect the performance of one of the products, namely motor insurance, at Ethiopian Insurance Corporation. The research was designed as an explanatory sequential mixed method where a quantitative phase utilized one sample t-test and relative importance index to identify factors affecting the performance of motor insurance at EIC. This was followed by an interview to further explain the findings of the quantitative phase. Accordingly, the findings indicate that even though motor insurance is doing well in terms of gross premium collection, it has a high loss ratio and is not contributing well to the underwriting surplus. Factors affecting the performance of motor insurance at the firm level in the order of their relative importance were identified as product/policy features; service quality, marketing and sales activities, use of technology as well as infrastructure.