Though insurance was employed in the years preceding 1970, the development of the insurance industry in Oman coincided with the comprehensive sustainable development led by His Majesty Sultan Qaboos bin Said Al Said. A component of the CMA’s mandate is to protect all market participants, ensuring, in the process, adherence to best standards and practices and the development of the sector.
In pursuit of such a mandate, several major milestones have been passed over the years. One of the most important and recent of these were the amendments to the insurance law (the Royal Decree No. 39 of 2014) which aims to enhance the depth and efficiency of the insurance sector and the quality of insurance services and products offered to consumers, by underwriting new risks.
As per these amendments, the minimum paid-up capital of insurance providers in Oman has been raised to OR10m ($26m). Moreover, the amendments require insurance companies to assume the legal structure of a public joint stock company. Existing companies have been given a grace period of three years to conform to the new prescribed legal structure as well as the paid-up capital limit.
Such amendments are intended to enable insurance companies to accommodate and underwrite higher and more diverse risk and, eventually, to increase retention ratios in the local market. By the same token, the amendments included new regulatory and supervisory powers to enable the CMA to enforce the application of the law and guide participants towards better industry standards and best practices. Equally importantly, insurance companies’ rights to appeal against the CMA’s decisions have been streamlined and clarified. Ultimately, the aim of the amendments is to enhance sector performance and protect the rights of policy holders.
The insurance industry has seen significant growth since 2011, largely due to the economic development in the sultanate and a higher awareness among the populace of the importance of various insurance products. The insurance sector expanded by 10% between 2013 and 2014, while the compound annual growth rate for the previous six In terms of the diversification of insurance portfolios, the CMA has been encouraging companies to diversify their portfolios away from motor insurance to respond to demographic and commercial developments in society which require protection from different types of risks. Progress has been achieved, with data indicating that the health insurance segment expanded by 38% between 2013 and 2014.
Health insurance is playing an increasingly important role in providing health care to policy holders, offering coverage that spans health care providers both inside the country and abroad. Available health insurance products are provided on at least two levels: first, retail, which covers individuals and their dependants; and second, group/corporate, which covers staff and employees in some government and private organisations. Other risks covered include professional indemnity, natural disasters, sabotage, property and life insurance, among others.
In addition to the insurance firms in Oman that provide conventional insurance products, there are two takaful (sharia-compliant insurance) companies. In 2014 they realised total direct premiums of OR23.7m ($61.4m), representing 6% of the total turnover of the sector. One of the achievements of the insurance sector is the Omanisation level, which reached as much as 68% in 2014. The CMA is now forging ahead in its endeavour to further Omanise the sector’s workforce, through proper training and certification in the different disciplines of the business. This move will ensure that a trained and skilled talent pool of Omani nationals exists when it comes to filling senior positions across the industry.
