MUSCAT: The fisher community at the heart of one of the Sultanate of Oman’s biggest economic sectors will soon benefit from insurance coverage to secure them, their equipment and assets, from an array of perils when operating out at sea.
A customised insurance policy, approved recently for implementation by the Capital Market Authority (CMA), now provides financial compensation to the owners and occupants of fishing boats against loss or damage to hull, machinery and equipment, third party liability, and personal accidents when engaged in fishing activities along the country’s coastal waters.
It marks the first time in the history of the sector that fishermen – estimated to number over 50,000 presently – will now have protection from financial loss stemming from natural hazards and accidents.
When implemented, the customised insurance policy will bring an estimated 25,000 Omani-owned fishing boats (including traditional boats and dhows) within the protective ambit of Article 17 of the Law of the Protection of Living Aquatic Resources promulgated by Royal Decree 20/2019. Its coverage encompasses 25 fisheries ports and jetties distributed across the country’s coastline and in coastal waters extending from Musandam in the north to Dhofar in the south.
The policy’s impending roll-out – 30 years since it was first mandated under the Sultanate of Oman’s Maritime Law promulgated by Royal Decree 35/81 on April 15, 1981 – is the culmination of a concerted, multi-year effort involving multiple government agencies, regulatory bodies and other stakeholders, says Murtadha bin Mohammed Jawad Ibrahim al Jamalani (pictured), Chairman, Finance & Insurance Committee at Oman Chamber of Commerce and Industry (OCCI) and Head of the Working Team of the project responsible for implementing the Fishing Boats Insurance Protection Recommendations.
“When it was first contemplated soon after the promulgation of the Oman Maritime Law in 1981, interest from the insurance industry was limited, while the fisher community was also averse to the premium they would have to bear annually. The initiative languished thereafter,” Al Jamalani explained.
“Recently, however, it was revived because of the rising number of deaths and assets lost due to sea perils and weather-related disasters. At the same time, local banks, notably Oman Development Bank (ODB), have begun requiring fishermen and owners of fishing vessels to insure their crafts and equipment procured against banking finance. Together with the Omani Fishermen’s Association, they sought the good offices of the OCCI in arriving at an insurance protection solution acceptable to all parties.”
Speaking to the Observer, Al Jamalani said a seminar hosted by the OCCI in December 2020 attracted representatives from all of the stakeholders, including manufacturers and suppliers of fishing equipment and outboard motors. The forum discussed the implementation of the insurance protection strategy for fishing vessels, fishermen’s welfare, and the mechanism to protect the profession and industry in accordance with the Law of the Protection of Living Aquatic Resources.
The seminar concluded with a number of recommendations, notably calling on the Omani Fishermen’s Association to oversee the rollout and operation of a Customised Insurance Policy for Fishing Boats and Vessels. Separately, the OCCI’s help was enlisted in facilitating the crafting of an insurance product that met the objectives of all stakeholders.
“We assembled a working team with representatives from the Capital Market Authority; Ministry of Agriculture, Fisheries and Water Resources; Ministry of Transport, Communications & Information Technology; Royal Oman Police (Coast Guard), and Central Bank of Oman, among other agencies, to design a customised insurance policy and operational manuals for use by the Oman Fishermen Association.”
As part of their deliberations, the working team looked at various examples of successful insurance policies and practices in force in leading countries around the world. They also reviewed the procedures and practices followed by the Ministry of Transport, Communication & Information Technology in licensing yachts and pleasure boats, the operation of a shipping register, and the role of Protection & Indemnity (P&I) Clubs.
With a view to shaping a market that is attractive to the insurance and reinsurance industry, the working team decided to add yachts and other vessels to the scope of the customised insurance policy, as well as procedures for registering such boats and vessels. This integration contributed to competitively-priced premiums, thus meeting a key prerequisite for the overall initiative’s success, Al Jamalani noted.
Additionally, to ensure that fishermen and fishing boat owners – the ultimate end-users of the insurance policy – were firmly on board, the working team adopted a unique approach for the policy’s rollout.
“We opted for market segmentation rather than fragmentation,” said Al Jamalani. “Thus, instead of offering the product to the wider insurance industry – which we reckoned would not elicit the required interest -- we proposed that the Omani Fishermen’s Association would float a tender and then choose the best bid from among the insurers. The selected insurer, with exclusive access to the market, is expected to offer the most competitive pricing to the fisher community. This exclusive arrangement will be limited to the first three years, following which other insurers will be able to compete as well. We hope, by then, this new insurance segment will contribute to the stability and sustainability of the product in the market.”
Significantly, the Capital Market Authority – the regulator of the insurance sector – has approved this innovative approach to the implementation of a standardised tailor-made Insurance Policy for Fishing Boats and Vessels in the Sultanate of Oman.
Its eventual rollout, anticipated during the first half of 2022, is expected to impart new impetus to the growth of the traditional fishing sector, which contributes the bulk of fresh fish harvests annually. With insurance coverage, local banks will be more amenable to providing funding support to fishermen for their purchases of new boats and equipment. Additionally, more young Omanis will be encouraged to consider fishing-based livelihoods once lending by banks is less cumbersome, Al Jamalani added.