Source: Insurance, Banking & Negotiable Instruments Law Teaching Material
The Bank of Abysinia (Habesha Bank) started rendering what could be called modern insurance service for the first time in Ethiopia in 1905 as an agent for a foreign insurance company. Mr. Muzinger, an Austrian citizen, opened a full-fledged insurance branch in Addis Ababa as an agent for Balois Fire Insurance Company. Many representative offices were opened by expatriates until the Italian invasion in 1936.
During the Italian occupation only Italian companies were allowed to operate in Addis Ababa and other central regions of the country and in Eritrea. After World War II several British and other overseas companies provided insurance service until 1950. In 1951, the Imperial Insurance Company was established by some enlightened Ethiopians.
This development encouraged Ethiopians and consequently some 18 companies were established in 1954 with branches and agents in Addis Abab, Asmara, Dire Dawa, Massawa, Assab and Dessie. In 1970, the first proclamation on licensing and supervision of insurance services, proclamation NO.281/70 was enacted. An office for the supervision of insurance business was established under the Ministry of Trade and Industry. The office licensed only 15 companies anew.
The following year two insurance companies were closed and only 13 remained; but these 13 lasted until 1974, when the Dergue Regime came to power. On January 1, 1975 all these 13 insurance companies were nationalized in accordance with the proclamation of the provisional military government. The Government merged the 13 companies and, by proclamation 26/ 1975, established the Ethiopian Insurance Corporation as a monopoly in insurance business. The Ethiopian Insurance Corporation functioned as a monopoly for nearly two decades until 1994. Following the 1974 Revolution, on January 1, 1975 all private banks and 13 insurance companies were nationalized and along with state owned banks, placed under the coordination, supervision and control of the National Bank of Ethiopia. The Ethiopian Insurance Corporation was formed by a merger of 13 insurance companies.
Thus, from 1975 to 1994 there were four state owned banks and one state owned insurance company, i.e., the National Bank of Ethiopia (The Central Bank), the Commercial Bank of Ethiopia, the Housing and Savings Bank, the Development Bank of Ethiopia and the Ethiopian Insurance Corporation.
After the overthrow of the Dergue regime by the EPRDF, the Transitional Government of Ethiopia was established and the New Economic Policy for the period of transition was issued. This new economic policy replaced centrally planned economic system with a market-oriented system and ushered in the private sector. Several private companies were formed during the early 1990s, one of which is Oda S.C. which conceived the idea of establishing a private bank and private insurance company in anticipation of a law which will open up the financial sector to private investors.