With robust year-on-year growth seen in new segments, including engineering, construction, medical, liability and property, Oman’s insurance market is starting to diversify beyond motor insurance, according to the Capital Market Authority (CMA).
“The growth of engineering and construction and liability insurance is an example of such diversification, as over the past years the number of construction projects in the country has risen substantially,” the market regulator said in a report released last week.
According to CMA, construction carries significant risks for all parties, and there is no requirement under Omani law for construction contractors to take out and maintain construction insurance. Insurance is thus a matter to be discussed and negotiated during the pre-contract phase.
“Nevertheless as Oman’s construction industry has matured it has become industry practice for construction contracts to include insurance requirements for the contractor throughout part or all of the life of the contract and beyond. The growth and take-up of such insurance is an indicator that commercial parties are recognising the benefits of insurance, even ahead of any legislative requirement to have insurance,” CMA said.
The sultanate’s insurance sector has been growing at an average rate of 14 per cent per year over the last six years, and now constitutes 1.2 per cent of GDP, which is high by global and GCC standards.
Total direct insurance premiums rose 10.4 per cent in 2013 to reach RO360mn, compared with RO326.8mn in 2012. The growth has mainly been driven by motor insurance, property insurance, and more recently by other types of insurance, such as medical and liability insurance.
At a press conference on Thursday, H E Abdullah al Salmi, executive president of CMA, said, “The growth and diversification of many sectors of the insurance industry demonstrates that Omanis are increasing their understanding of the value and importance of insurance. At the same time, we have developed our regulatory approach to enhance opportunities for insurance companies to offer greater choice to consumers while also increasing protections for consumers.”
According to CMA, around 1.2mn people and businesses are protected by insurance in the sultanate, with RO216.8mn paid out to insurance policy holders in 2013. The amount of insurance premiums paid per person averaged across the whole population has seen an increase from RO64 to RO123 person over the past six years, reflecting the spread of insurance from motor to include other segments.
Pay outs by insurance companies increased faster in 2013 than insurance income. Paid claims for 2013 were RO216.2mn, up 19 per cent from the 2012 figure of RO181.7mn. The areas of largest increase in pay outs were property, marine, liability and health insurance.
To deal with the expansion in products, scope and types of risk being covered by insurers in Oman, CMA said it is developing enhanced insurance regulations and guidelines.© Copyright - Muscat Daily