Muscat: The Oman government has raised the minimum capital of insurance firms to OMR10 million from OMR5 million and has asked national insurance firms to float shares on the Muscat Securities Market (MSM) within three years.
A Royal Decree was recently issued to amend certain clauses of the Insurance Companies Law related to minimum capital and listing of companies.
The existing companies have been given a grace period of three years to raise their minimum capital to OMR10 million, Ahmed Ali Al Maamari, acting director general of insurance supervision at the Capital Market Authority (CMA), told Times of Oman.
Currently, only new companies are required to have a minimum capital of OMR10 million and need to go public when listing shares on the local bourse.
"We would like to enhance the financial strength of insurance companies," added Al Maamari.
"The new companies have to offer shares to the public at the time of formation," he said.
Although the Sultanate has 22 insurance companies (11 locally incorporated and 11 branch operations of foreign firms), only four companies — Dhofar Insurance, Oman United Insurance, Al Madina Takaful and Takaful Oman — are listed.
These firms include two Islamic insurance or takaful firms. All these companies have achieved a 10.44 per cent growth in their gross direct premiums to OMR364 million in 2013, from OMR329.6 million posted for the previous year.
Strengthening the capital base of insurance firms will make these institutions large enough to underwrite more risks and retain the premium within the country. "It is good for the existing companies and the industry as a whole. The existing companies will have better underwriting capacity, which will enable them to retain the business within the country.
"However, there could be a problem for new players planning to enter the market," noted K. V. Francis, resident manager of New India Assurance. He said that most of the companies have already reached OMR10 million in capital. "We have achieved it a year back," he added.
Most of the national companies have exceeded the OMR10 million capital base. There are a few other amendments in the area of enforcement, Al Maamari said.
Francis said that the Ministry of Manpower has asked insurance companies to achieve a minimum of 65 per cent Omanisation.
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