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SMIB/4/2026 LICENSING AND SUPERVISION OF MICROINSURANCE AGENTS

National Bank of EthiopiaSMIB/4/2026

Summary

This directive establishes the licensing, regulation, and supervision requirements for individuals and entities acting as microinsurance agents in Ethiopia. It outlines the eligibility criteria, application processes, responsibilities, and operational restrictions for microinsurance agents and providers to facilitate the growth of the microinsurance sector.

Who's affected

Microinsurance agents (both individual and corporate), microinsurance providers, and insurance brokers/agents engaging in microinsurance intermediary services.

Action required

Entities and individuals intending to act as microinsurance agents must apply for a license from the National Bank of Ethiopia by meeting the specified eligibility criteria, completing required training, and submitting all necessary documentation and fees.

Key points

10
  • Establishes licensing and supervision framework for microinsurance agents.
  • Defines 'corporate microinsurance agent' and 'individual microinsurance agent'.
  • Outlines specific eligibility, training, and professional indemnity requirements.
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    • Details application, renewal, and modification processes for licenses.
    • Specifies restrictions on agent activities, including acting for multiple providers.
    • Mandates written agency agreements with clear roles and responsibilities.
    • Addresses premium collection, remuneration, and record-keeping obligations.
    • Defines roles and responsibilities of microinsurance providers and corporate microinsurance agents regarding agent conduct.
    • Includes provisions for suspension and cancellation of licenses.
    • Applicable to microinsurance agents, providers, and licensed insurance brokers/agents involved in microinsurance.

Requirements

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  • Individuals and entities must obtain a license from the National Bank of Ethiopia to act as a microinsurance agent.
  • Applicants must meet eligibility criteria for corporate or individual microinsurance agents.
  • Responsible persons and specified persons must complete mandatory training courses.
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    • Corporate microinsurance agents must maintain professional indemnity cover.
    • Individual microinsurance agents must maintain professional indemnity cover.
    • A written agency agreement is required for each microinsurance provider.
    • Corporate microinsurance agents authorized to collect premiums must maintain a separate bank account for premiums.
    • Microinsurance agents must disclose if they are not acting exclusively for a single microinsurance provider for a distinct license category.
    • Microinsurance providers must assign a Responsible Person to manage relationships and monitor agents.
    • Corporate microinsurance agents must assign a Responsible Person to manage relationships and monitor specified persons.
    • Microinsurance providers and corporate microinsurance agents must keep records of agency agreements, specified persons, and any misconduct or breaches.
    • Licensed insurance agents and brokers must apply for authorization to engage in microinsurance intermediary services.

Rights and permissions

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  • Microinsurance agents have the right to receive remuneration, commission, and fees as per the agency agreement.
  • Microinsurance providers may pay microinsurance agents wages, salary, initial and renewal commission, and remuneration fees.
  • The National Bank of Ethiopia may extend the validity period of a microinsurance agent license.
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    • The National Bank of Ethiopia may exempt a microinsurance agent from certain restrictions upon written application.
    • Microinsurance providers may seek redress against a microinsurance agent for liabilities arising from the agent's actions.

Restrictions

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  • A person cannot act as a microinsurance agent without a license.
  • Microinsurance providers cannot permit unlicensed persons to act as their agents.
  • Microinsurance providers cannot pay commission to unlicensed persons for intermediary services.
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    • Microinsurance agents can only provide intermediary services for license categories stipulated in their license and within the terms of their agency agreement.
    • A microinsurance agent may only act on behalf of a single microinsurance provider for each distinct license category.
    • Microinsurance agents are prohibited from charging policyholders or beneficiaries amounts outside of those specified in the agency agreement.
    • No future commission or remuneration, other than outstanding payments for services rendered when the license was valid, is payable if the license is suspended/cancelled or the agency agreement is terminated.
    • No person other than a natural person can act as a Specified Person.
    • No Specified Person shall act for more than one microinsurance provider or corporate microinsurance agent.

Penalties

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  • Breach of any provision in this Directive shall result in sanctions from the National Bank of Ethiopia.
  • Penalties may be imposed in line with Article 5 of Directive No. SIB/27/2004, where appropriate.
  • The National Bank may suspend or cancel the license of a microinsurance agent for breach of the directive, misrepresentation, misconduct, or cancellation of the agency agreement.
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    • If a microinsurance agent fails to apply for renewal, the license is automatically suspended and will be cancelled if not renewed within one year, requiring a new license application.

Objectives

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  • To promote the development of the microinsurance sector in Ethiopia.
  • To establish appropriate regulations for licensing, regulating, and supervising persons acting as distribution channels for microinsurance business.
  • To ensure efficient and effective delivery of market-demanded microinsurance products to clients.
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    • To address the obstacle of the absence of distribution networks with commercial incentives.

Organizations

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  • National Bank of Ethiopia
  • Ethiopian Cooperative Commission

Legal references

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  • Insurance Business Proclamation No. 746/2012
  • Insurance Business Proclamation No. 1163/2019
  • Commercial Code
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    • Directive No. SMIB/3/2020
    • Directive No. SIB/27/2004
Original sourcehttps://nbe.gov.et/files/smib-4-2026/
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