The recently inaugurated Grand Ethiopian Renaissance Dam (GERD) as Africa’s largest hydropower project is not only a feat of engineering and diplomacy but also one of the most complex insurance undertakings in Ethiopia’s history.
Since construction began in 2011, the GERD has been protected by a layered network of insurance policies, jointly underwritten by all 16 local insurance companies in Ethiopia alongside several major international insurers.
With the dam now shifting from construction to operation, the coverage is set to evolve into new, more sophisticated policies tailored to its economic and geopolitical significance.
Insurance from the start
According to Abel Tadesse, CEO of the Ethiopian Insurance Company (EIC), which serves as the lead underwriter for the GERD, the project has so far been insured under two principal categories. The first is Contractors’ All Risk (CAR), a policy that provides coverage for the civil works carried out during the construction phase. The second is Erection All Risk (EAR), which specifically covers the electromechanical components of the project, including the turbines and other power-generation equipment.
Together, these policies ensured that both the structural and technical aspects of the dam were protected throughout the construction period. Both policies were jointly carried by local insurers to their capacity, with excess risk ceded to reinsurance giants abroad.
German reinsurer Munich Re has been the lead foreign partner throughout the project, continuing a 50-year relationship with Ethiopia. Negotiations are underway for a new operational insurance framework, with Munich Re expected to remain central while other international players join the risk-sharing pool.
Operational risk
As GERD transitions into full power generation—with six turbines running and more to follow, the dam requires a different class of insurance coverage, experts note.
Insurance specialist Asseged Gebremedhin emphasises that the operational phase of the GERD requires comprehensive, multi-layered coverage. He explains that this should include property and asset insurance to protect the full dam structure, along with business interruption insurance to compensate for potential losses caused by power outages or supply disruptions.
In addition, Gebremedhin underscores the importance of natural disaster and catastrophe insurance to safeguard against risks such as floods, earthquakes, or extreme weather events linked to climate change. Finally, he points to the necessity of liability insurance, which would cover damage to third parties—a particularly crucial safeguard given the sensitivities surrounding downstream Nile Basin countries.
“This is not just about safeguarding turbines or walls,” Gebremedhin explained. “It is about protecting the backbone of Ethiopia’s economy and a project tied directly to regional stability.”
Experts emphasise that GERD’s insurance model is unique in Ethiopia. Unlike most infrastructure projects, the dam’s scale demanded pooling by all local insurers, supported by foreign reinsurance.
Insurance analyst Fikru Tsegaye noted: “If there is a single project in Ethiopia insured by almost every domestic company, it is GERD. The fact that international giants like Munich Re are also on board makes it extraordinary.”
So far, no catastrophic claims have been filed, though insurers have paid out compensation for workplace accidents during construction.
Why insurance matters
Beyond protecting physical assets, GERD’s insurance coverage is seen as critical to building investor and public confidence. With Ethiopia positioning GERD as both a national pride project and a regional energy hub, capable of exporting power to countries such as Sudan, Kenya, and Djibouti, comprehensive risk management is essential.
According to industry insiders, Ethiopia is exploring policies used in other mega-dam projects worldwide, such as Brazil’s Belo Monte and China’s Three Gorges. These include parametric insurance, which pays out automatically when specific triggers (e.g., extreme rainfall or water-level thresholds) are reached, reducing disputes over compensation.
GERD is more than a dam; it is an energy lifeline, a symbol of sovereignty, and a potential flashpoint in Nile geopolitics. Its insurance coverage reflects that complexity: a multi-billion-dollar shield against construction mishaps, operational failures, and natural or political risks.
As the turbines roar to life, Ethiopia’s insurers and global partners are racing to finalise a new generation of policies that can secure the GERD’s role as a cornerstone of the region’s economic future.