FSA approves natural disaster cover for third-party motor insurance

MUSCAT, JAN 19

The Financial Services Authority (FSA) has issued Administrative Decision (1/2026) approving new regulatory amendments to the Unified Motor Insurance Policy Model, introducing a package of benefits aimed at expanding insurance protection for motor insurance policyholders and enhancing the quality of services provided.

The regulatory amendments include the introduction of specific timeframes for claims settlement and the simplification of related procedures.

The revised policy now provides automatic coverage for material damage to insured vehicles resulting from natural disasters and climatic events, which applies to all motor insurance policies, including third-party motor insurance. The FSA has worked closely with insurance and reinsurance companies to ensure that the cost of this new coverage is aligned with the expected level of risk.

The revised policy introduces a new provision for compensation in cases of delays in vehicle repairs beyond the specified timeframes, in accordance with regulations to be issued by the FSA at a later stage. It also allows policyholders the option of receiving cash compensation for the value of damage resulting from an accident, instead of having the insurance company undertake the repair of the vehicle.

It further confirms regulatory amendments to the list of consumable spare parts that must be replaced with new parts without any depreciation deductions, expanding the list to 37 items. The decision grants insurance companies a period of 30 days from the date of its publication to implement the new regulatory amendments, allowing sufficient time to complete the necessary technical and operational requirements and to ensure smooth implementation in a manner that supports market readiness and safeguards the rights of all parties.

Abdullah bin Salim al Salmi, Executive President of the FSA, stated that the new regulatory amendments to the Unified Motor Insurance Policy form part of the FSA’s methodology of continuous review of the legislative and regulatory framework governing the insurance sector, with the aim of ensuring adequate insurance coverage. He noted that the regulatory amendments shed light on the FSA’s core role in assessing the effectiveness of existing regulatory practices, with a view to further developing the efficiency of the motor insurance market in line with current requirements and the public’s need for insurance services.

Al Salmi explained that the inclusion of an addendum providing natural disaster coverage under third party motor insurance is based on a realistic assessment of the impacts of climate-related changes experienced by the Sultanate of Oman in recent years. This, he noted, underscores the need to expand the role of insurance as an effective tool for managing climate risks and mitigating their effects, thereby providing greater protection and supporting broader social and economic stability.

He further indicated that the recent amendments are expected to deliver a range of economic and social benefits, most notably strengthening the national social protection framework, part of which is funded by insurance companies. The regulatory amendments will enhance societal preparedness to address climate risks, improve recovery capabilities following natural disasters and support financial stability and economic sustainability for individuals and institutions alike.