Climate change has become a leading issue among science, political, and legal scholars,rnand it definitely have profound implications for the insurance industry. Climate changernrelated catastrophic events such as floods, droughts, fires, challenge the insurancernindustryâ€˜s abilities to measure, predict, and price risk as well as their financial viability.rnAgriculture is one of the macro-sectors of the Ethiopian economy which accounts for morernthan 45% of the GDP with majority of farmers depend on traditional rain-fed agriculture;rnvariations in weather conditions put them into substantial risks. Drought is the majorrnextreme weather event in Ethiopia affecting the life of millions. The impact of climaternchange on agriculture has thus necessitated the need for appropriate action to combat thernnegative effects. The main objective of the study is to examine the processes ofrnimplementation and challenges and opportunities of insurance industry in the climaternchange adaptations and mitigation. The method of analysis is qualitative and description.rnContent analysis of policy and legal documents and explanation are also used. Afterrnassessing different studies and responses from different experts on the sector as well asrndata availed by some companies in the sector, it is concluded in this study that the existingrnpractices of weather related insurance services that can play its own role in adapting to thernimpacts of climate change are not satisfactory. Major participants like the National Bankrnof Ethiopia /the Central Bank/ are not giving it the necessary focus for this important rolernof the insurance sector as a business. Different pilot tastings conducted for more than fourrndecades in different initiatives from different actors shows no advancement in the sector.rnWeather related services of the insurance industry are infant. A number of challenges werernindicated from in this study from the side of service delivery including cost of assessingrnthe damage in cases of loss, the complexity nature of Index based insurance products costsrnof promotion/awareness creation, costs of feasibility study historical data analysis torndetermine premium rates, lack of insurance literacy among the local farmers and the like.rnIn effect this study proposes a feasible solution marrying the merits of both state andrnprivate insurance. Considering the risks associated with drought which hit Ethiopia severalrntimes; it is suggested that government funded or supported services be studied andrndeveloped as soon as possible in Ethiopia to cope with the increasing risks of climaternchange.