Natural perils: Oman Reinsurance, Oman’s first and only reinsurer, to manage Omani Natural Catastrophe Pool
Galvanised by the spate of adverse weather events that have pummelled the Sultanate of Oman in recent years, at significant cost to human life and property, a first-ever Natural Catastrophe Pool is proposed to be rolled out to support insurance payouts to policyholders who are victims of natural disasters.
The initiative is being led by Oman Reinsurance Company (Oman Re), the country’s first and only reinsurer, which recently underwent a successful public listing and is currently listed on the Muscat Stock Exchange (MSX).
The proposed ‘Nat Cat Pool’ for the Omani market marks the culmination of several years of deliberations between insurance companies, the sector regulator Capital Market Authority (CMA), Oman Insurance Association and other stakeholders, according to a top official of Oman Re.
“Considering the increased frequency of natural catastrophe events in Oman in the recent years, Oman Re initiated a national dialogue with the regulator and Oman Insurance Association in view of mitigation and management of natural catastrophes affecting Oman since 2018,” said Dr Juma bin Ali al Juma, Chairman of the Board of Directors – Oman Re.
Those efforts gained momentum late last year in the wake of Cyclone Shaheen which inundated large swathes of North and South Al Batinah governorates, as well as Muscat Governorate, wrecking infrastructure, businesses and residential homes. Several lives were lost as well.
At a workshop held in the aftermath of Shaheen, top executives of leading insurance firms called for the establishment of a Nat Cat Pool for the Omani market. It also led to the formation of a Steering Committee with representatives from six local companies and chaired by Oman Re. The panel is “actively working on the various technical aspects of the reinsurance pool formation”, Dr Al Juma stated in the Directors’ Report of Oman Re for fiscal 2021.
“The deployment of the Omani Nat Cat Pool is planned for the second half of year 2022. All local insurance companies and the Capital Market Authority expressed their agreement in principle that Oman Re should be the Nat Cat Pool Manager...”, the Chairman further added.
Cyclone Shaheen is understood to have unleashed insurance losses to the tune of RO 62 million when it struck northeastern parts of the Sultanate of Oman in October 2021. More than 9,800 insurance claims were submitted by individuals, homeowners and businesses across a number of wilayats impacted by the storm.
The magnitude of insurance losses has led to more stringent terms for reinsurance contracts governing natural disasters, according to a leading insurance firm.
“In view of the above, the reinsurance market is already seeing hardening of terms for reinsurance contracts with numerous restrictions including sub-limited storm, tempest and inundation cover. Facultative reinsurers have tightened terms and the 1st January renewal season has seen reduction of capacities and cover for Oman. We expect cautious selection of risks, and push by reinsurers for increased retentions by the local insurers,” the company stated in its 2021 Annual Report.
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