Premiums of insurance sector rise

Business Saturday 25/May/2019 16:58 PM
By: Times News Service
Premiums of insurance sector rise

Muscat: The gross direct premiums of the insurance sector have increased to OMR463.50 million at the end of 2018 compared to OMR451.50 million at the end of the previous year, according to the audited financial statements of the insurance sector published in the 15th issue of the Insurance Market Review 2017-2018.
The indicators reveal an increase in the insurance premiums at OMR12 million to reach 2.6 per cent thanks to the increase in the gross domestic product (GDP) of Oman at 12 per cent to OMR30.40 billion.
The contribution of the insurance sector to the GDP decreased to 1.52 per cent in 2018. It is noted the insurance market maintained reasonable levels of growth during the past four years despite the state of the economy and expenditure reduction policies adopted by the businesses and the government due to the fall in oil prices.
It is an indication of awareness of the importance of providing insurance coverage besides progress in the levels of dealing with the insurance service as an essential need to manage the enterprises as the insurance is a safeguard from the risks the individuals and institutions are exposed to in order to preserve the wealth. It is noteworthy that the capital of insurance companies is about OMR248.60 million in 2018.
The indicators show structural changes in the distribution of the volumes of insurance premiums for the first time in the history of the Omani market. The health insurance premiums are in top of the other products by 33 per cent of the total insurance premiums surpassing the motor insurance premiums, which were 31 per cent.
Gross health insurance premiums were OMR152 million while motor insurance premiums, comprehensive and third party, were about OMR145 million.
The figures point out that health insurance witnessed considerable growth during the period 2011-2018 at 30.5 per cent thanks to the increased demand for health insurance products due to advancement of the thinking of private sector institutions and methods of management of their human resources further to expected increase in demand for health insurance products.
A look at the other branches of insurance shows clear differences in the growth rates and decrease in the premiums of various insurance products, however, the properties insurance witnessed a remarkable growth in the past year at 22 per cent in 2018. Gross premiums of properties insurance were OMR48.70 million at 10.5 per cent of the gross insurance premiums.
The increase is attributed to the increased public awareness of the importance of such insurance products, which means insuring homes against fire and natural calamities, as well as insurance of buildings, other properties and vital projects.
Moreover, Oman’s experience in the past years, such as the exceptional climate forced the owners of properties to provide insurance coverage. Insurance companies contributed during the Cyclone Mekunu in May 2018 in covering losses at OMR150 million to mitigate the loss and damage to the properties.
On the other side, the number of insurance policies, general and life, issued by insurance companies in 2018 have increased by 17 per cent to 2 million policies including 1.722 million general insurance policies and 285,664 life insurance policies compared to the policies issued in 2017 which were 1.722 million policies including 1.614 million general insurance policies and 108,000 life insurance policies.
The statistics show the role played by the insurance in compensations in 2018. Total indemnities paid by insurers were OMR385.80 million, a 26 per cent increase compared to 2017 which emphasises the role the insurance sector plays in mitigating the damage to the individuals and institutions. The indicators also show the role of the insurance in pumping investments to the local market as investment scheme contributing to stimulating the national economy. Total investments of insurance companies were OMR621 million, a 7 per cent increase compared to 2017.
Takful indicators shows that gross Takaful premiums have increased by 17 per cent to OMR53.58 million at 12 per cent of the total insurance portfolio in 2018. Insurance brokers have played an active role in enhancing the performance of the insurance market in the Sultanate. Gross premiums collected by brokers were 25 per cent of the total insurance premiums in 2018.