Ethiopian Insurance Corporation has many competitors in the Insurance Industry. Recently, there are fifteen private owned Insurance Companies those become the major competitors of the Ethiopian Insurance Company. Now a days Insurance Companies are attractive for new customers and retain the existing one by using different mechanisms. Among these mechanisms selling insurance policy with credit option is one of the customers attracting strategy. Consequently, collection of the accumulated trade debt balance of these credit sales has become one of the difficult problems of the EIC. The general objective of this study is to investigate the effect of uncollectible premium in connection with credit terms of insurance policy in EIC, Mekelle zone, Tigray. The present study is a case study and both primary as well as secondary data are used in this study. In order to examine the aspects of performance, appropriate financial ratios are used. The overall conclusion is that there is a serious problem which the corporation is facing in its credit management process.