Health insurance grows 12.5pc, group insurance shrinks 19.9pc

By Samuel Kutty — MUSCAT: FEB 28 – The health insurance in the Sultanate continues to be in positive trajectory with a 12.5-per cent growth in 2016. “This good rate of growth, comparing to 2015, is an indication of increased awareness of the benefits of health insurance in obtaining better levels of healthcare,” said a statement from the Capital Market Authority. Health insurance now stands second to motor insurance. Individual life insurance and health insurance recorded the highest increase among the insurance classes at 240 per cent and 68 per cent respectively in 2016 compared to the same period in 2015.
Group health insurance decreased by 19.9 per cent and comprehensive motor insurance by 9.6 per cent.
“The increase in the gross underwritten premiums in 2016 reflected positively on the net retained premiums of the insurers after deductions for reinsurance”, the statement said.
Net collected premiums have increased by 4 per cent in 2016.
However, unaudited financial statements filed by insurance companies suggest that the total insurance premiums have increased only by 1.9 per cent for the gross premiums underwritten during 2016 compared to 2015.
The volume of the Omani insurance market at the end of 2016 was about RO 454.64 million compared to RO 446.24 million in 2015 with an increase at RO 8.4 million.
At the same time, gross retention ratio for insurance companies in 2016 for all classes of insurance was 57 per cent falling from the 2015 ratio which was 85 per cent.
The retention ratios of the properties, engineering and transport insurance were the lowest compared to the classes of insurance at 12 per cent, 18 per cent and 19 per cent respectively as the portfolios of these products are exposed to higher risks and therefore the insurance companies resort to reinsurance, the statement pointed out.
The retention ratio for the motor insurance — comprehensive and third party — recorded 84 per cent and 81 per cent respectively.
The reduction in the engineering insurance has adversely reflected on the net retained premiums at 39 per cent compared to the same term in 2015.
Operation results of insurance companies show increase in the earned premiums in 2016 at 19 per cent compared to 2015.
Gross earned premiums were RO 252 million in 2016 compared to RO 212 million in 2015. Earned premiums represent insurance premiums for the accounting term of the financial statements after settlements of non-earned premiums.
“Earned premiums are significant indication when compared to the incurred claims during the same term to know the profit of the company from the insurance premiums,” the statement added.
Net commission charged to global reinsurance companies  increased by 23 per cent compared to 2015. Net compensations and production costs increased from 2015 to 2016 by 36 per cent and 27 per cent consecutively.