Environment, Risk Management & Insurance Products
The economy in the Sultanate of Oman, as indeed that of the other GCC countries, is dominated by the national government. As a result, the insurance industry tends to get a substantial part of its business from the government and semi-government entities in line with the national structure of the economy.
Source of business transactions are Direct Selling by the insurance companies, or / and through insurance agents, Bancassurance, insurance brokers, and Electronic Channels (e-commerce). Analysts can observe from the Insurance Market Index Editions Years 2022, 2021 & 2020 evidence of unbalanced insurance business portfolios represent big challenges to the insurance industry.
Private insurers need to suitably amp up their risk management capabilities going forward. When they insure businesses and their operations, they need to have the requisite knowledge and capabilities to identify and assess the risks their clients face and accordingly provide them with insurance coverage.
Risk management is a discipline that insurance firms must be conversant with. Significantly, major reinsurance companies are averse to offering competitive business terms and conditions to the markets due to two key factors: adverse claims experience and low retention of risk.
INSURANCE PRODUCTS
Fisher Community Protection
The fisher community at the heart of one of the Sultanate of Oman’s biggest economic sectors will benefit from tailor-made insurance coverage to secure them, their equipment and assets, from an array of perils when operating out at sea.
The customized 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.
We at Oman Chamber of Commerce and Industry (OCCI) 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 customized and tailor-made insurance policy and operational manuals for use by the Oman Fishermen Association.
I was heading the Finance & Insurance Committee at Oman Chamber of Commerce and Industry (OCCI) for period 2018-2022 and was also Head of the Working Team of the project responsible for implementing the Fishing Boats Insurance Protection Recommendations.
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.
The Capital Market Authority – the regulator of the insurance sector – has approved this innovative approach to the implementation of a minimum insurance standardized tailor-made Insurance Policy for Fishing Boats and Vessels in the Sultanate of Oman.
It’s anticipated and 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.
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 customized 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. (To be continued...)
Murtadha M J Ibrahim al Jamalani, Entrepreneur & Insurance Expert
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