MARKET UPDATE: Ethiopia - New Levies to Support Disaster Risk Response Fund

Mar 9
2 min read

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REGULATORY UPDATE SUMMARY

On 31 January 2026, it was reported that a new decree issued by the Council of Ministers will take
effect in February, directing levies on bank loans, insurance premiums and other sources into the
newly created Disaster Risk Response Fund. Insurance companies will be required to contribute
1% of all monthly premiums to the Fund.
The decree takes effect in February 2026 and is intended to create a centralized, predictable financing mechanism for disaster preparedness and humanitarian response.

Background Context

Key Structural Elements to this regulatory update include:

The new regulation creates a dedicated disaster risk response fund office with full accountability

It grants the Fund Office legal authority to own property, to enter into contractual agreements, and oversee the collection, management, and disbursement of funds

The new regulation mandates that most contributions be remitted on a monthly basis, creating predictable and recurring funding streams that strengthen liquidity

What Does This Mean for Multinational Insurance?

The new Disaster Risk Response Fund decree introduces significant obligations for Ethiopia’s financial and insurance sectors, embedding private institutions directly into national disaster financing. By mandating contributions from insurers, banks, and fintech companies, the regulation not only expands the country’s funding base for disaster preparedness but also creates new operational, compliance, and financial considerations for industry participants.

FINANCIAL & INSURANCE SECTOR IMPACT
1. Insurers must surrender 1% of premiums, aligning the industry with broader risk-pooling responsibilities
2. Banks must contribute 1% of loan values while Fintech income faces a 5% levy
ECONOMIC IMPLICATIONS
1. Possibility of cost pass-through to customers
2. Concerns regarding administrative enforcement capacity
3. Likelihood of cumulative regulatory burden on heavily supervised sectors

Global Impact of Ethiopia's New Levies:

A list of the 5 global implications for Ethiopia's new regulatory changes

Implications for Multinational Insurance Programs

Ethiopia's new levies will have a number of implications on global, multinational insurance programs:

List of four implications that Ethiopia's new regulations will have on multinational insurance

Strategic Takeaway

This decree signals a structural evolution in sovereign disaster financing; one that embeds insurers directly into national resilience frameworks. For multinational organizations, the development reinforces three realities:

Regulatory costs tied to climate resilience are rising.
Insurance is increasingly viewed as public financial infrastructure.
Jurisdictional divergence will continue to shape global program design.

Expect more governments - particularly climate-exposed economies - to formalize disaster funds with mandatory industry contributions, gradually redefining the boundary between insurance markets and public risk financing.

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