Oman's competitive insurance market may see boon from digital and sharia-compliant products


The countrywide introduction of mandatory health insurance for private sector workers and their families will offer a considerable boost to Oman’s insurance sector, helping it to sustain growth. However, there are considerable challenges to be overcome, such as the slowing growth of insurance premium. The market also remains crowded, and in some cases the pursuit of premium has cut into underwriting standards and become a challenge to the long-term sustainability of the market.

The Capital Market Authority (CMA), the body tasked with overseeing and regulating insurance activity, is introducing new training and regulatory conditions that should make for an even more competitive market and provide a higher level of service. Companies are therefore likely to develop their digital offering as a means of securing a competitive advantage. One bright spot is the takaful (Islamic insurance) segment, which continues to grow at a faster rate than its conventional counterpart, in line with trends across the region.

Structure & Oversight

In 2004 responsibility for the insurance sector was transferred from the Ministry of Commerce and Industry to the CMA in order to develop and restructure the legislative and regulatory framework. The CMA is responsible for the regulation of both national and foreign companies in Oman. In the last decade the authority has introduced a number of important legislative changes in an attempt to increase the transparency and stability of the sector. In 2014 an amendment to the insurance law raised minimum capital requirements for insurance firms from OR5m ($13m) to OR10m ($26m). The authority is currently implementing the International Financial Reporting Standard 17, which will also help align local provision with international best practices.

The changes implemented by the regulator are generally viewed as positive contributions to the industry. “As the regulator, the CMA has a strong relationship with all insurance players,” S Venkatachalam, CEO of National Life and General Insurance Company (NLGIC), told OBG. “Through the Oman Insurance Association, they acknowledge various insurance players, and give equal opportunities for all players to have their voices heard,” he added.

At the end of 2019 there were 20 insurance and reinsurance companies operating in Oman, 11 of which were nationally incorporated companies, with another nine operating as branches of foreign insurance companies incorporated outside Oman. Overall, insurance companies have 195 approved branches across the country’s 11 governorates.

Performance & Size

Despite challenging economic conditions brought about by oil price fluctuations, Oman’s insurance sector has registered steady growth of 8% between 2014 and 2019, according to the CMA. As of May 2019 the sector was approaching OR500m ($1.3bn) in value, a figure which is expected to balloon once the Unified Health Insurance Policy (UHIP) initiative takes effect.

According to the most recent data published by the CMA, the insurance sector contributed 1.52% – or OR30.4bn ($78.9bn) – to Oman’s GDP in 2018. This is compared with 1.63% and OR27.6bn ($71.7bn) in 2017. Gross written premium (GWP) increased by 3%, from OR451.6m ($1.17bn) in 2017 to OR463.6m ($1.2bn) in 2018, bucking the regional trend. According to industry publication Atlas Magazine Insurance, GWP in the MENA region shrank by 3.5%, from $58.9bn in 2017 to $57bn in 2018.

At the same time, per capita expenditure on insurance remained relatively stagnant, falling marginally from OR98.93 ($256.92) in 2017 to OR98.85 ($256.71) in 2018. According to the latest information from Omani investment bank Ubhar Capital, the insurance penetration rate stood at 1.63% of GDP in 2017, suggesting there is still considerable potential for expansion. To compare, the average penetration rate across the GCC was about 2.3% in 2017, according to global ratings agency Standard & Poor’s, below the emerging market average of 3.2% and short of the global average of 6.2%.

“Insurance penetration is less than that of the UAE and Saudi Arabia, and as a country Oman has not reached its full penetration potential,” Sunil Kohli, CEO of Dhofar Insurance, told OBG. “Therefore, consistent, affordable reinsurance availability and competition from a reasonable number of insurance players is ultimately good for the market, because this will allow Oman to reach the threshold of penetration among other GCC countries.”

According to the CMA’s latest audit of insurance companies’ financial statements, total sector assets increased by 5% in 2018 to OR1.1bn ($2.9bn). Of this, OR804.5m ($2.1bn) was generated by general insurance and OR300.6m ($780.7m) by life insurance. Totalling OR791.4m ($2.1bn), assets at national insurance companies represented 72% of the sector total, overwhelming foreign players, who comprised OR313.7m ($814.7m), or the remaining 28%.

Major Players

Despite the highly fragmented nature of the market, almost 60% of sector premium is claimed each year by the county’s five largest insurers. NLGIC remains the market share leader, comprising 29% of the market by GWP in 2018. An approximate 70% of the company’s activity is focused on medical insurance, with motor making up the majority of the remaining 30%. In 2018 GWP at NLGIC grew by 17% to reach OR135m ($350.6m). This was followed by Dhofar Insurance with OR40m ($103.9m) and an 8.6% market share; Oman United Insurance with OR36.7m ($95.2m) and 7.9%; Vision Insurance with OR27.5m ($71.4m) and 5.9%; and Al Ahlia Insurance with OR26m ($67.5m) and 5.6%.

Although there were incentives for consolidation due to the comparative oversupply of providers, there have been few mergers lately. Despite the lack of activity, Mehdi Al Harthi, general manager of retail at Dhofar Insurance, told OBG that many companies are open to the possibility as a means of generating liquidity and remaining competitive.

Mandatory Health Insurance

2018 marked the first year in which health insurance replaced motor insurance as the largest segment by gross direct premium, growing to account for 36% of the total, up from 32% in 2017. Meanwhile, motor insurance decreased from 36% to 33% over the same period. In 2018 property came in third place, accounting for 11% of total gross direct premium.

This trend is set to carry on as the government continues to roll out the UHIP, which will introduce mandatory health insurance for all private sector employees in the sultanate in mid-2020, including expatriates and visitors, their spouses and children. This new regulation reflects a more general trend that has been gaining traction across the region. Indeed, the UAE, Saudi Arabia and Bahrain have all introduced similar programmes in recent years.

Before the UHIP, only Omani nationals could access government hospitals, thus the scheme will provide easier access to health care for expats, of which around 70-80% are currently uninsured in the private sector. “The scope of the UHIP is set to benefit all people in Oman, expats and Omani nationals alike,” Jonathan Jane, country manager at Axa Insurance, told OBG. “The project will also provide a wider availability of health care outside Muscat, and will encourage more international health care providers, for example hospitals and clinics, to set up in Oman,” he said. The UHIP programme will be phased in over 2019-22 period, with the CMA estimating that it will cover some 2m people out of a total population of 4.5m. As of mid-2019 the number of people with health insurance in the country stood at an estimated 450,000.

In October 2019 the CMA issued new health insurance regulations, which are expected to be followed by a related royal decree in early 2020. Among the changes in the new health insurance regulations is the Dhamani electronic platform, which will work in tandem with the new mandatory health insurance programme, and is set to facilitate insurance coverage for employees. The platform will monitor system expenses in addition to the quality of services offered by providers. With procurement already under way, the platform is expected to come on-line in the middle of 2020.

While the estimated cost to the private sector is expected to range between OR50 ($130) and OR200 ($519) per individual employee, which is a considerable outlay, it could provide a platform for private sector players to increase their premium. The CMA is currently in the process of formulating a regulatory and pricing framework that will allow certain private sector players to sell UHIP insurance products. An estimated six providers are expected to ultimately be granted a special licence by the CMA.

To apply, firms must have experience, the capacity to handle a rising number of claims and meet a minimum capital requirement of OR10m ($26m).


Due to a combination of factors, growth in the motor segment – traditionally a profitable area – has slowed recently. A decline in new vehicle sales, combined with a drop in the number of accidents – which have nearly halved in two years, from 4721 in 2016 to 2802 in 2018 – and a more rigorous approach to traffic rules, have led to a drop in the number of new premium issued. There has also been a corresponding fall in premium value, from around 3% of the cost of the vehicle to about 1.5%. Regardless, given that all drivers are required to take out policies, motor insurance will likely remain an important source of revenue.


The life segment remains strong, although the CMA’s annual report shows that gross direct premium of individual life insurance policies decreased from OR61.4m ($159.5m) in 2017 to OR59.6m ($154.8m) in 2018. This was due to considerable growth in group premium such as combined general and life insurances, which are often favoured as they provide more attractive rates than individual policies. This is especially beneficial to corporate clients taking out a multiple policies.

Sharia-Compliant Provision

The introduction of a takaful segment in 2014 has increased competition. Despite its relatively late entrance to the market, sharia-compliant products are now growing faster than conventional insurance. While the segment is not fully regulated yet, rules governing takaful activities are currently being reviewed by the Ministry of Legal Affairs and were to be issued in 2019, according to local media. Gross direct contributions among takaful providers increased by 17% in 2018, to reach OR53.5m ($138.9m), comprising 12% of the total insurance market. Over the same period, assets at sharia-compliant providers fell by nearly 40%, from OR194.6m ($505.3m) to OR119.2m ($309.6m). However, when taking into account the movement in related liabilities, the net asset value of the segment went up 1% during the year.

For now, the two segments remain segregated, as companies can only be licensed to provide one or the other. There are two Islamic insurance providers currently operating in Oman: Al Madina Takaful and Takaful Oman. In 2018 Al Madina Takaful reported gross written contributions of OR30.5m ($79.2m), up from OR29.9m ($77.7m) in 2017. This was followed by Takaful Oman, which recorded gross contributions of OR23.1m ($60m), up from OR15.8m ($41m) in 2017.

Distribution Channels

Alongside traditional branches, there are 40 brokerages and 119 agents operating in Oman, which together account for roughly one-third of all premium. According to the CMA, in 2018 brokers contributed 25% of total premium, or OR116.8m ($303.3m), for 0.3% growth on 2017, while agents claimed 7%, or OR31.3m ($81.3m).

Bancassurance, or the sale of insurance by banks to customers on behalf of insurance companies, has been in existence in Oman since 2004. Although firms such as NLGIC offer such services, their share of total premium remain low.

One of the more forward-thinking developments has come from the takaful segment. In June 2019 Al Madina Takaful signed a two-year deal with Inma, Oman’s small and medium-sized enterprise (SME) development fund, to provide insurance to small businesses. The partnership will provide SMEs with both customised solutions and package offerings.

Digital Services

Oman is also expanding its digital offering. In addition to the CMA’s Dhamani electronic platform for mandatory health insurance, the CMA has also launched the CMA Portal in conjunction with the Department of Information Technology. This sector-focused database will provide easier and quicker access to financial, technical and administrative information.

In the private sector, Al Madina Takaful announced in February 2019 that it was launching a bilingual e-insurance platform and mobile app. Customers are now able to register, track claims and receive reports using their mobile devices. Meanwhile, in March 2019 Oman Insurance Company won an award for health insurance provision at the general meeting of Al Omaniya Financial Services due in part to its clear focus on digital solutions.


Frequent reinsurance and brokerage is necessary in Oman, largely because local firms do not have the capacity to cover all risks. Different sectors have different solvency margins, meaning there can be considerable variation in how much risk insurance companies are able to cover. The GCC’s insurance markets are characterised by somewhat low retention rates, and Oman is no exception. According to the CMA, the globally accepted retention ratio for premium is 50% or more. In Oman, the figure for both foreign and domestic firms averaged 58.7% in 2018, up from 57.5% the previous year. National companies retained approximately 55% of their total premium in 2017 and 2018, while rates at foreign firms increased by nearly 9.5 percentage points from 66.2% to 75.8% over the same period.

Until recently, some local providers were acting as virtual brokers, passing on risk to global reinsurers. However, the 2014 insurance law amendments raising minimum capital requirements have boosted the capacity of individual firms to maintain risk on their books without falling back on reinsurance.

Initial Public Offerings

The 2014 amendments to the insurance law also required national insurance firms to convert to public joint-stock status and carry out initial public offerings (IPOs) on the Muscat Securities Market. This is beneficial with regard to transparency, as insurance company data can now be found in the public domain. The CMA requires that 65% of shares on offer are reserved for retail investors and 35% for institutional investors.

In recent years several IPOs have benefitted from the investment environment and attracted foreign investment. In September 2017 Oman Qatar Insurance Company concluded a successful IPO by offering up 25m shares at a nominal price of OR0.16 ($0.42) per share. In October 2017 NLGIC conducted a OR21.2m ($55.1m) IPO, putting up 66.25m shares at a an offer price of OR0.32 ($0.83) each. Also in 2017 Al Ahlia Insurance Company and Vision Insurance raised a respective OR7.5m ($19.5m) and OR4m ($10.4m). More recently, Arabian Falcon Insurance announced an IPO in April 2018, offering 25m shares at a price of OR0.19 ($0.49) per share.

Omanisation & Training

In late 2018 there were 3175 people employed at Oman’s insurance companies, brokers and agencies. Of these, nationals held 2241 positions, working either in various technical and managerial roles at insurance companies, or as brokers and agents. The Omanisation rate of national and foreign insurance companies stood at 74% and 77%, respectively, well in line with the 70% target set by the Ministry of Manpower (MoM). As a key tenet of achieving the country’s Omanisation targets, nine training programmes were executed as part of the Tamkeen programme, which saw the participation of 237 nationals teams working with insurance companies. The programme aims to upgrade the skills of Omani employees and address a regular criticism about perceived standards of underwriting among national providers. The MoM has also been actively targeting recent graduates to take up employment in the industry.


The Omani market is crowded, and as expected, this has driven down premium prices and affected profit. However, there are some clear bright spots, with new heath care requirements in particular having the potential to offset this decline. The sector has ample room to grow over the longer term. The takaful segment, in particular, is set to continue posting notable gains by conquering new market shares. Companies that can provide innovative digital solutions stand the best chance of prospering in the next few years, while those that cannot compete on these terms may struggle.

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