Insurance sector in Oman expects 11% growth in premium income

Muscat: Omani insurance companies are expected to achieve a 10-11 per cent growth in gross premium revenue this year, a top-level official of a leading insurance firm said. Gross direct premium of insurance firms in Oman grew by 11 per cent to OMR442 million in 2015.
Motor insurance, both comprehensive and third party, constituted 37 per cent of all insurance premiums while health insurance represented 23 per cent of the gross written premiums last year.
Among various segments, healthcare insurance and motor insurance segments are growing, said S. Venkatachalam, chief executive officer of National Life & General Insurance Company – the largest insurance firm in Oman in terms of premium income.
Venkatachalam said that the recent fall in new vehicle registration may not result in a significant impact on motor insurance premium of insurance firms. “The new vehicle registrations are going down. But I don’t think it will have a major impact on motor insurance premium,” he said, adding: “The new regulations will put motor insurance more attractive.” Also, vehicle insurance renewals will continue as usual.
Raising capital
Venkatachalam also noted that his company has raised its paid up capital to OMR15.5 million from OMR10.5 million, by issuing rights shares to the existing shareholders. “The company is growing and it needs additional capital (to support the growth),” noted the National Life & General Insurance chief.
He also added that one of the focused areas of National Life & General Insurance, which has a network of 16 branches, is motor insurance. “Motor insurance will be a good portfolio within one or two years.” National Life expects to achieve a market share in the region of 20-25 per cent.
Venkatachalam also said that seven or eight national insurance companies have to float shares on the Muscat Securities Market (MSM) before August 2017 in line with an amendment in regulation by the insurance regulator - Capital Market Authority (CMA). In line with the new regulation, National Life is also planning to offer 40 per cent of its capital to investing public before the stipulated deadline.
In 2014, Oman government has asked national insurance firms to raise capital base to OMR10 million from OMR5 million and to float shares on the local bourse.
The existing companies were given a grace period of three years to raise their minimum capital to OMR10 million, which is ending in August next year. Strengthening of capital base of insurance firms will make these institutions big enough to underwrite more risks and retain the premium within the country.
Although the Sultanate has 22 insurance companies (11 locally incorporated companies and 11 branch operations of foreign firms), merely four companies – Dhofar Insurance, Oman United Insurance, Al Madina Takaful and Takaful Oman - are listed.
Referring to competition from Takaful (Islamic insurance) firms, Venkatachalam said that these firms are able to offer insurance coverage at attractive rates. “There is marginal competition from Islamic insurance companies. But one needs to see the long-term implications. Takaful insurance industry is in its initial stages of growth.”
The growth rate of takaful insurance in 2015 was 68 per cent compared to 2014.