Need for a comprehensive review of Oman’s Insurance Law

Economic legislation plays a fundamental role in regulating markets, protecting stakeholders, promoting financial stability and supporting sustainable economic growth. However, the success of any legislation should not be measured by the date of its enactment, but rather by its ability to achieve its intended objectives while adapting to evolving economic, financial, technological and market developments.

Over the past years, the insurance sector in the Sultanate of Oman has undergone significant legislative and regulatory reforms. Among the most notable requirements was increasing the minimum paid-up capital of national insurance companies to RO 10 million, together with the requirement that they operate as public joint stock companies listed on the Muscat Stock Exchange (MSX). These measures were introduced to strengthen financial solvency, improve corporate governance, enhance transparency and disclosure; and protect the interests of policyholders and shareholders.

The regulatory framework also introduced measures aimed at promoting competition and preventing excessive market concentration. These include limiting an individual insurance company’s market share to 33 per cent of the total insurance market, unless justified by compelling reasons approved by the regulatory authority. In addition, the ownership of any individual or corporate shareholder is generally limited to 25 per cent of the company’s share capital, thereby promoting diversified ownership, sound corporate governance and institutional stability.

After several years of implementation, a number of important questions deserve careful consideration:

 Have the increased capital requirements achieved their intended objective of strengthening the financial solvency and long-term sustainability of insurance companies?

 Have these legislative reforms increased the insurance sector’s contribution to Oman’s GDP and improved insurance penetration?

 Has the domestic insurance market retained a greater proportion of underwriting risks, or does a significant share of premiums continue to flow to foreign reinsurance markets?

 Has the increase in capital improved underwriting performance, profitability and resilience during periods of financial stress?

 Has listing on the MSX strengthened corporate governance, transparency, disclosure and investor confidence?

 Have these regulatory requirements encouraged mergers and acquisitions, resulting in stronger and more competitive national insurance companies?

 Have insurance companies invested sufficiently in developing Omani talent and implementing Career & Succession Planning to ensure leadership continuity?

 Does the current 33 per cent market share limit continue to achieve the appropriate balance between competition and economies of scale, or should it be reassessed in light of current market realities?

 Does the 25 per cent ownership limit for individuals and institutions continue to serve the objectives of good governance and market stability, or is greater flexibility now required to attract strategic investors with capital, expertise and advanced technology?

 Should future legislation place greater emphasis on financial resilience, governance quality, enterprise risk management, management effectiveness and institutional performance rather than relying primarily on fixed numerical thresholds?

 Is the time right for Oman to adopt a Risk-Based Regulatory Framework, aligned with international best practices, that rewards well-managed and financially sound insurers while encouraging innovation and sustainable growth?

Today’s insurance industry faces challenges and opportunities that were not envisaged when many of the current regulations were introduced. These include digital transformation, artificial intelligence, cybersecurity, climate change, health insurance reforms, agricultural insurance, catastrophe insurance and increasingly sophisticated international standards for capital adequacy and enterprise risk management.

Consequently, periodic legislative review should become an institutional practice based on measurable performance indicators, empirical evidence and regulatory outcomes rather than the mere passage of time. The most fundamental question therefore remains: Does the Omani insurance sector require a comprehensive review of the Insurance Law, or should the priority now be to strengthen implementation, improve corporate governance, enhance technical pricing, reinforce enterprise risk management and invest in human capital development?

In conclusion, the purpose of raising these questions is not to advocate legislative change for its own sake, but rather to encourage constructive professional dialogue and an objective assessment of whether the Insurance Law and its implementing regulations have achieved the objectives for which they were enacted. International experience demonstrates that successful legislation is characterised by periodic review, evidence-based policymaking and continuous improvement.

Future reforms should therefore seek an appropriate balance between protecting policyholders, promoting healthy competition, attracting investment, strengthening corporate governance, enhancing financial resilience, developing national talent and encouraging innovation.

As Oman continues its journey towards achieving the ambitions of Oman Vision 2040, periodic legislative review should be regarded not as an exception, but as an essential element of good governance, regulatory excellence and sustainable economic development.