Gross direct premiums of insurance companies in the Sultanate increased by 5 per cent to RO 486.5 per cent in 2019, compared to RO 463.5 in 2018, the Capital Market Authority (CMA) – the regulator of the insurance industry – said in a report.
The growth in insurance premiums average 4 per cent in the past five years. Direct gross premiums of general insurance increased by 5 per cent to RO 425.8 million in 2019 compared to RO 403.9 million in 2018. General insurance’s share was 87.5 per cent of the total insurance portfolio accompanied by an increase in gross direct premiums of life insurance by 2 per cent to RO 60.7 million in 2019 compared to RO 59.6 million in 2018. Life insurance’s share was 12.5 per cent of the total insurance portfolio. Takaful products recorded 20 per cent growth in direct premiums during 2019 compared to the previous year. Takaful’s share was 13.2 per cent of the total insurance portfolio at about RO 64 million.
Despite the unfavourable environment, characterized by slow growth and recession in the past years, insurance premiums witnessed remarkable growth due to increased awareness of the economic and social importance of insurance to hedge risk and safeguard wealth.
Most insurance products witnessed increase in the volume of insurance premiums except motor insurance which decreased by 10 per cent and liability insurance which decreased by 5 per cent. This type of insurance provides cover for legal liability for claims by third parties to compensate for the loss resulting from accidents to properties and bodily injuries or death related to third party.
On the other hand health insurance products recorded good levels of growth to reach 24 per cent during the period 2011-2019. Health insurance represents the biggest share in the total market share for the second consecutive year, accounting for a 34.3 per cent share (RO 167 million) and surpassing motor insurance, which was the market leader.
The sector is expected to witness greater growth in response to the government’s policy during the coming period to make health insurance compulsory for the employees of the private sector, residents and visitors. The number of insured Omanis and expatriates during the past year totaled around 490,000, with this number projected to exceed 1 million when the Dhamani scheme is implemented.
Property insurance grew 31 per cent in 2019, generating RO 63.8 million in premiums last year compared to RO 48.6 million in 2018. Average growth during the five years was 6 per cent. It is noteworthy that properties insurance covers properties against loss and damage and is different from the marine, aviation, transport and motor insurance. The increase was due to increased turnout on properties insurance such as homes, buildings, roads, and so on, which could be affected by adverse weather events.
Insurance companies paid RO 324.5 million in claims in 2019 in addition to the claims paid by reinsurers. Compared to the claims paid in 2018 the audited financials show the claims paid in 2019 decreased by 16 per cent.
Performance of the Insurance Companies
Insurance companies enjoy strong financial position to play a greater role in accommodating the volume of the economic activity in the Sultanate and to provide adequate protection from the expected risk to individuals and institutions especially after increasing the minimum limit of the capital of national insurance companies to RO 10 million in the amendments to the Insurance Companies Law under Royal Decree No. 39/2014 which aimed at enhancing the financial ability of insurance companies with their capital reaching about RO 254 million at the end of 2019. As to the level of investment performance of insurance companies they witnessed a considerable increase at the end of 2019 with investments at more than RO 754 million compared to RO 621 million in 2018 increasing by 21 per cent which is a good indicator compared to the investment performance of the other economic sectors. The proceeds of investments of insurance companies in 2019 increased by 29 per cent to about RO 23.9 million compared to RO 18.5 million in 2018. The retention ratio of insurance companies in 2019 was about 60.5 per cent increasing compared to 2018 in which the retention ration was about58.7 per cent.
The number of insurance companies licensed to carry out insurance business is 20 companies plus Oman Reinsurance Company. There was 35 licensed brokers at the end of 2019 and more that 145 insurance agents in the Wilayats and Governorates of the Sultanate.