MUSCAT, NOV 11 - The introduction of a Unified Health Insurance Policy (UHIP) scheme – the first phase of which is anticipated sometime early next year – will drive the growth of insurance premiums in the Sultanate, according to the Central Bank of Oman (CBO). Health insurance coverage under the scheme – dubbed ‘Dhamani’ – will be mandatory for employees of private sector organisations in the Sultanate, their dependents, and tourists and visitors as well. Its phased roll-out will have beneficial implications not only for the domestic health care sector, but the wider national insurance sector as well, the apex bank noted.
“Implementation of the scheme and issuance of the UHIP coincides with the remarkable growth in health insurance products. The share of health insurance in the total insurance portfolio was 33 per cent in 2018 due to growing market awareness and belief in the importance of the health insurance and its key role in reducing the costs of treatment in case of illness or injury,” the CBO stated in its 2019 Financial Stability Report (FSR) published here last week. Dhamani, the Central Bank further said, will help attract international health institutions to the Sultanate, and bolster health care services across the wilayats and governorates of the Sultanate.
“Moreover, the increased demand for the health insurance policy will contribute to attracting international insurance companies. Further, a newly active market will deliver employment opportunities in the insurance and health sectors,” the FSR stressed.
Importantly, the anticipated launch of mandatory health insurance will also help lift insurance penetration levels in a country characterised as “under-insured”, according to the Central Bank.
“The metrics for the insurance sector show that, Oman is relatively under-insured, therefore, there is a substantial scope for growth of the insurance sector. Insurance penetration, defined as the ratio of insurance premiums to GDP, was about 1.5 per cent in 2018, which is comparable to that of GCC countries (1.9 per cent in 2016) but remains much lower than the global average of 6.1 per cent,” it said.
Similarly, Insurance Density — defined as insurance premium per capita — averages RO 100.7 in the Sultanate, versus a GCC average of RO 187 and a global average of RO 262.
The relatively low levels of insurance penetration level and insurance density point to the presence of unserved and underserved markets in the Sultanate, which represent opportunities in themselves, the report noted. It however stressed the importance of better awareness of insurance products and services among to help drive growth in this key sector.
Although a vital economic sector, gross insurance premiums rose a modest two per cent to reach RO 463 million in 2018, up from RO 454 million a year earlier. General (non-life) insurance represented the dominant segment, accounting for 87 per cent of gross premiums. Within this broader segment, medical insurance was the single biggest category with a 33 per cent share, followed by motor insurance (31 per cent).
Net claims increased to RO 173 million in 2018, up from RO 167 million a year earlier — the uptick partly resulting from insured losses arising from Cyclone Mekunu, which caused significant damage to property in 2018.
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