Little Ethiopia, Lion Insurance Partner for Digital Insurance Product in Ride-Hailing Industry

A landmark partnership between ride-hailing company Little Ethiopia and Lion Insurance introduces insurance coverage for passengers and drivers covering up to one million birr in claims. The digital insurance product, unveiled at the Skylight Hotel on Tuesday, charges passengers an additional 15 birr per trip as a premium.

Abraham Mersha, CEO of Lion Insurance, lauded their product a game-changer for the ride hailing industry. He pointed out that Little was an ideal partner for the digital insurance service in consideration of its high corporate clientele. 

Passengers are assigned a unique ID number that codifies details of the trip and sends it out to the insurer, the ride-hailing company, and the customer.

“We will use the ID to settle claims after an accident,” Abraham told Shega.

The CEO further noted that a maximum insurance payout of one million birr would be provided in the event of death during the trip.

In Kenya, where Little also operates and offers similar coverage, the insurance protects riders against total and permanent disability, hospitalization expenses, and death due to an accident during a trip. It also includes ambulance service reimbursements and provides a lump-sum cash payout (hospital cash) for hospital admission resulting from an accident.

While Ethiopia has experienced marked growth in the financial industry over the past few years, most of the gains have been concentrated in banks and microfinance institutions. Less than 1% of Ethiopians are currently insured, with nearly three-quarters of the coverage being for motor and maritime insurance. Ethiopia’s insurance industry lags in terms of diversity and penetration. Little’s new service is supplementary to the existing third-party insurance required of ride-hailing company drivers.

Since 2022, a growing trend has emerged in which new financial services and products catering to the ride-hailing sector are being launched. While many of these initiatives focus on providing vehicle loans to individuals looking to enter the sector, some offer financial products and services tailored to drivers already working under these platforms.

ZayRide and the now-defunct Wez had partnered with Awash Bank to provide life insurance for drivers, which offers compensation equivalent to three years of a driver’s revenue in the unfortunate event of their death on the job.

Enat Bank also provides drivers with various credit services, including loans for annual tax payments, vehicle maintenance, and related expenses.

In 2023, Little Ethiopia partnered with Bank of Abyssinia’s neobanking platform, Apollo, to offer collateral-free loans of up to 120,000 birr for its drivers.

Berhane Assefa, Corporate Manager of Little Ethiopia, expects the new feature to become an additional selling point for the ride-hailing company.  He says their large number of corporate clients will make it easier to incorporate the service into their existing operations.

“The service is common in several countries; Ethiopia is just late to the party,” Berhane told Shega.

A new icon is being added to the Little application, which activates the insurance service. International ride-hailing companies like Uber have long maintained an insurance service as part of their service portfolio offered through a Safety Toolkit.

Nyawira Maina, Regional Manager of Little App, says the partnership goes beyond an insurance service as it provides peace of mind for passengers. She referred to the Little Super App in Kenya to signal the potential evolution of the service in Ethiopia.

As Little marks nearly a decade since its establishment in Kenya, it has expanded into Uganda, Tanzania, and Zambia over the years. The company’s super app has become an ‘everyday everything’ service offering bill payments, food delivery, and attendance management services. Little will mark three years in March since it began operations in Ethiopia.