22 per cent spike in property insurance post-Mekunu
July 10, 2019 | 9:17 PM
by Times News Service

Muscat: Oman has seen a surge in the number of householders insuring their property against natural disasters.

Following the damage caused to people’s goods and property by Cyclone Mekunu last year, Oman’s Capital Markets Authority reported an increase of 22 per cent in property insurance, with officials attributing this type of growth to greater public awareness.

Last year, partly due to the damage caused by Mekunu, insurance companies in Oman received claims amounting to OMR150 million. However, only OMR48.7 million was finally paid out, less than a third of that claimed.

A spokesperson at the Sultanate’s CMA told Times of Oman: “Property insurance witnessed remarkable growth of 22 per cent in 2018. Property premiums amounted to OMR48.7 million, representing 10.5 per cent of the total. This rise is due to the increasing public awareness of the importance of holding this type of insurance product. “

“The unusual weather conditions experienced by the Sultanate during the past year highlighted to property owners the importance of insurance cover,” he said.

More people have become aware of the need to insure their property against natural disasters

This type of insurance covers buildings and vital projects against the risk of fire and adverse climatic conditions, says the CMA. Overall, the total compensation paid by insurance companies amounted to OMR385.8 million, up 26 per cent compared to 2017, which confirms the role played by the insurance market in reducing the material effects on both individuals and companies, explained the CMA official.

The total investments of insurance companies amounted to OMR621 million, reflecting an increase of seven per cent compared to 2017. Furthermore, the capital of the insurance companies amounted to about OMR248.6 million in 2018.

Other insurers in Oman also reflected what the Capital Markets Authority said in this matter. Hassan Al Lawati, the CEO of Marsh Insurance Oman, said his company had also seen a significant increase in insurance claims related to property damage

“Over the last couple of years, we have seen approximately 70 per cent of all our claims result from property damage and out of this, nearly 23 per cent of these claims are due to weather events such as flooding,” said Al Lawati.

“The most common claims we see are in the commercial and property sector, specifically the commercial and non-medical business sector. This is mainly due to flooding, which comes from natural events. Weather disruptions such as cyclones, heavy rain, winds and flooding which Oman has witnessed over the course of the last few years has seen spikes in claims, as a result of the damage to property and interruption to business operations.”

He added: “Insurance and risk management is a vital part of any company’s success. Earlier, the focus of businesses was to grow the company’s top-line income. However, with an ever evolving and highly competitive business, it is imperative for them to safeguard the assets and balance sheets and look into the foundations of the organisation to encourage sustainable profit. This is a trend we are observing both on a regional and global level.”

In addition, PM Jabir, manager at Salam Insurance, said that one of the reasons more and more people were taking property insurance policies was because awareness was spreading.

“There is increased awareness among people, and more are taking property insurance now,” he explained. We have a proposal form for all insurance plans. In this case, we need to know where the property was built and the type of construction. Nowadays, as brokers, we are finding that people have their own questions, such as whether things like theft and flooding are covered and to what extent. People are definitely more aware nowadays.”

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