Who should carry the bill when extreme weather strikes Oman — households, small firms, insurers, or the state? What financial protection is actually in place today, beyond motor and medical cover? When a cyclone or flash flood hits, how quickly can people repair homes, reopen shops and restart production? Where do losses spread first — from residential areas and cars to supply chains, tourism sites, warehouses and industrial estates? And why does this matter now, as Oman invests in growth sectors that depend on continuity, confidence and functioning logistics?
For years, Oman’s insurance debate has centred on the issues people feel daily: motor premiums and the friction of medical claims. Those concerns are real, because motor and health insurance touch millions of residents and shape household budgets. But they are no longer the strategic test of the market. The bigger test is climate risk — severe storms, flooding and other weather shocks that arrive suddenly, affect whole communities at once and create losses far beyond what many families and SMEs can absorb.
This is where the “protection gap” becomes practical rather than academic: the difference between total economic losses and insured losses. When that gap is wide, recovery becomes slower, more unequal and more dependent on improvised solutions. The burden does not disappear; it shifts to households through debt, to businesses through lost cashflow and to the wider economy through delayed projects, disrupted trade and weaker confidence.
Oman has made progress in modernising insurance oversight and pushing the sector towards a more data-driven direction, including digital infrastructure for health insurance processes. These reforms matter because they strengthen governance and reduce administrative friction. Yet modern supervision and digital systems do not automatically solve the hardest problem: how to finance and pay for large, correlated losses — the kind that hit many policyholders at the same time.
That is why the next step should be structural: building a national catastrophe-risk insurance architecture that makes coverage available, affordable and reliable when the shock is biggest. Oman’s market has discussed the concept of a catastrophe pool — a collective mechanism that spreads risk and expands capacity so insurers can offer broader, more affordable coverage. Directionally, this is the right idea, but it will only work if it is built as a system, not a headline.
A credible framework must answer five practical questions. First, what is covered and what is excluded? If cover is limited to motor losses, it will miss the bigger economic wound. Property losses — homes, shops, warehouses and tourism facilities — often drive the cost of recovery. For businesses, continuity matters: without business interruption cover, even “insured” communities can struggle to restart.
Second, how will risk be priced and can people afford it? Pure risk-based pricing can be technically correct and socially unworkable. A national framework needs balance: pricing that reflects risk and rewards resilience, alongside safeguards that prevent high-risk areas from being priced out of protection. Third, how will reinsurance be structured? Catastrophe risk is concentrated, with many claims arriving at once. Without strong reinsurance layers, a pool becomes a local concentration of risk instead of a stabiliser.
Fourth, how fast will it pay and how transparent will it be? After a disaster, speed is not a customer-service metric; it is a recovery metric. Clear triggers, simple documentation standards and predictable dispute resolution are what people remember and what determines whether a system is trusted. Fifth, how will it reduce losses before they happen? Insurance should not just compensate; it should encourage prevention. Premium incentives for flood-proofing, resilient construction and compliance with safety standards can translate risk awareness into practical behaviour, linking insurance to planning rather than treating it as an afterthought.
None of this works without data. No scheme can price what it cannot measure. For catastrophe cover to be fair and sustainable, risk data must be treated like national infrastructure: updated flood maps, exposure data, historical loss patterns and geospatial analytics that help insurers underwrite sensibly and help authorities reduce vulnerability. Without this, pricing becomes either arbitrary, which fuels distrust, or overly conservative, which creates premium shock and both outcomes weaken uptake.
Motor and health insurance will remain politically and socially sensitive; and stability in these lines matters. But resilience will not be built by managing the loudest products alone. A major weather event can produce costs far beyond motor claims, and if property and business risks remain underinsured, the economy still relies on improvisation after the fact.
Oman can move from concept to capability without triggering social backlash by sequencing reform over the next 12-18 months. It should publish the catastrophe framework in plain language, including scope, governance, funding model, reinsurance structure and payout process. It should prioritise property and SME continuity, where recovery is won or lost. It should build a national exposure and loss dataset, reward prevention through pricing incentives and publish a simple “trust metric” after major events that shows time to settlement, share of claims paid and main causes of disputes.
Oman does not need to choose between growth and resilience. It can design an insurance system that protects households, keeps businesses trading and supports recovery without turning premiums into a new social burden. The real choice is timing: build the catastrophe-risk backbone now, deliberately and transparently, or wait for the next major storm to force change under pressure.
Oman Observer is now on the WhatsApp channel. Click here
