Lack of health insurance hampers health sector, new entrant aims to bridge the gap
Ethiopia’s health sector continues to face significant challenges due to the widespread lack of health insurance coverage, experts say, leaving millions of citizens exposed to high out-of-pocket medical expenses and limiting access to quality care. As the country strives toward universal health coverage (UHC), the arrival of a new insurance company, Was Insurance SC, signals a potential turning point for affordable and accessible healthcare.
Despite notable improvements in health outcomes and increased government spending on healthcare over the past decade, Ethiopia’s health insurance penetration remains among the lowest in Africa. Less than 1% of the population is covered by general insurance, and only about 0.27% have life insurance, according to recent studies. As a result, out-of-pocket payments account for roughly 31% of total health expenditure, placing a heavy financial burden on households—especially those in the informal sector.
Community-based health insurance (CBHI), launched in 2011 to protect low-income and vulnerable populations, has expanded to cover about 81% of administrative districts and 60% of targeted households, benefiting over 55 million people. However, CBHI schemes are often fragmented, with limited risk pooling and inequities in coverage and contribution rates. Many still face gaps in coverage, and the quality of care at health facilities remains a concern, driving some members to seek more expensive private care.
In response to these persistent gaps, Was Insurance SC is preparing to launch as Ethiopia’s first dedicated medical and general insurance provider. Backed by more than 70 shareholders and awaiting final approval from the National Bank of Ethiopia, the company aims to provide comprehensive health coverage and help reduce the financial strain on citizens.
At its inauguration ceremony, company leaders highlighted their vision to “protect the health of the people of our country and create wealth for our people, especially our members,” according to Henok Teka, CEO of Droga Group, which counts Was Insurance among its ventures. Droga Group has a decade-long track record in pharmaceuticals, medical supplies, and physiotherapy services, and is recognized for its commitment to improving healthcare access in Ethiopia.
Was Insurance SC plans to offer a range of medical insurance products tailored to the needs of Ethiopia’s diverse population, with a particular focus on making coverage affordable for low-income groups. The company’s entry is expected to spur competition and innovation in a market long dominated by a handful of players, most of whom have traditionally avoided medical insurance due to high costs and regulatory hurdles.
The Ethiopian government has made UHC a central goal, rolling out a series of health sector development plans and introducing fee waivers for the most vulnerable. The Health Insurance Agency, established in 2010, is working to implement both CBHI and SHI, with the latter expected to cover formal sector workers in the near future. Policymakers are also considering regional or national pooling of insurance funds to improve risk sharing and financial sustainability.
However, experts warn that mandatory health insurance will be difficult to enforce in Ethiopia’s largely informal economy. Instead, they recommend increased subsidization for the poorest households, improved risk pooling, and ongoing efforts to raise public awareness about the benefits of insurance.
The arrival of Was Insurance SC comes at a critical time for Ethiopia’s health sector. If successful, the company could help bridge the gap between existing CBHI schemes and the broader goal of universal coverage, offering new options for millions of uninsured Ethiopians. By focusing on affordability, quality, and public education, Was Insurance SC and similar initiatives have the potential to transform healthcare access and financial protection for all.
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