In Ethiopia, the insurance sector is an integral part of the financial sector in particular and the economy as a whole. Its role in assisting the country to achieve its macroeconomic stability and growth objectives is undeniable. This research paper aims to provide insight into the origin and development of the insurance sector in Ethiopia, as well as its structure, regulatory framework, performance, and present state. The study is entirely based on the review of literature from various secondary sources. The paper concludes that even if the insurance sector significantly contributes to the country’s economic growth and development, its achievement is far below many other Sub-Saharan African countries, the rest of the world, and international standards. However, the paper indicates that there is a huge growth potential for the insurance business in Ethiopia