The Sultanate's bold move requiring all insurers to become listed on the MSM promises to shake up the sector, with only the toughest remaining.

The growth drivers of Oman's insurance sector may be contextualized in regional trends. Sector data reveals that fueled by sustained economic performance, for the 2012 to 2017 period, GDP per capita at purchasing power parity (PPP) across the Gulf countries is projected to grow by 2% to 4%. Add to this a median age, in general, of below 30 years and a rising propensity to make big-ticket purchases like cars and homes, the consequence is more policies being written. Indeed, the GCC's insurance industry is projected to grow at a compounded annual growth rate (CAGR) of 18.1% in the 2012 to 2017 period to USD37.5 billion, with the life segment on USD2.4 billion and the non-life segment on USD35.1 billion. And while the life insurance segment is estimated rising by an approximate annual average rate of 2% for the period, the non-life segment is estimated to expand by 20.0% annually. This projection sees non-life boosting its stake in the regional market from 86.6% in 2012 to 93.6% in 2017.

A Wider Objective

And turning fully to Oman, construction and infrastructure investment stands to boost the non-life segment, as the economy urgently diversifies away from oil. Oman's insurance sector infrastructure has been honed through legislation and regulation in step with the wider goals of the National Vision 2020. This requires an efficient insurance industry capable of assisting the capital markets to generate liquidity for broader economic growth. And meanwhile, investor and public confidence has been raised by ensuring transparency and high standards of corporate governance. Notably, the 2014 Royal Decree No. 90/2004 transferred the insurance sector from the Ministry of Commerce and Industry, under the regulatory wing of the Capital Market Authority (CMA), itself launched in 1999. Additionally, the CMA, also the regulator of the Muscat Capital Market (MSM), engages in public education on the merits of insurance as a savings instrument. Oman's Central Bank (CBO) identifies notable upside potential for the Sultanate's insurance field of 22 players, including 11 foreign insurers. In 2015 it delivered the sector a shot in the arm by stipulating that bank loans be backed up by life insurance. Omanization is a core goal of the Vision 2020, and official data confirms a 1ppt rise in Omani employees in the sector for 2015 to 66% of the total.

IPOs are “Go!”

The most significant recent sector development, though, was the 2014 Royal Decree stipulating that all insurance companies raise their capital to OMR10 million (previously just applicable to new market entrants) and become listed on the MSM, offering a minimum 4% stake. The purpose of the decree was explained in a TBY interview by HE Abdullah Salim Abdullah Al Salmi, the Executive President of the CMA. “First, we want to have big players and well-capitalized insurance companies (...) able to underwrite certain risks, keep these risks in Oman and depend less on reinsurance.” One likely consequence was revealed when he added that, “We are trying to (...) encourage consolidation in the industry.” Listing will, in theory, raise capital for insurers enabling them to take on more high-risk asset classes. Prior to the decree, the stocks of just four insurers traded on the MSM, namely, Al Madina Insurance Company, Dhofar Insurance Company, Oman United Insurance Company, and Takaful Oman Insurance. Those insurers likely to see IPOs first are Al Ahlia Insurance Company, Muscat Insurance, Muscat Life Insurance, National Life Insurance, Oman & Qatar Insurance, Vision Insurance, and Falcon Insurance. A.R. Srinivasan, the CEO of the latter firm, described the forthcoming IPO as the step “to a second level company, with the hopes of being in the top tier within the near future.” And while the initial plan had been for IPO in October of 2015, a depressed market delayed the move.

Key Figures

For 2015, Oman's insurance density, namely the per capita insurance premium, was shy of OMR100, thus notably below the GCC average of OMR141 and the global average of OMR252 per capita by CBO reckoning. Meanwhile, the latest CMA report for 2014-2015 indicates a 1.4% contribution to GDP. By end-2015 gross written premiums (GWP) had climbed 11% YoY to OMR442.08 million. Motor insurance premiums, both comprehensive and third party, claimed 37% of total gross premiums, while health insurance premiums held about 23% of the total. Total capital of insurance firms at end-2015 was at OMR194.41 million, up 2% YoY, where the total capital of national players was at OMR104.94 million (up 1% YoY), while that of foreign insurers rose by OMR 3.54 million (4% YoY). Total sector assets in 2015 rose 2% to OMR777.98 million from OMR761.40 million due to the increased assets of foreign players (up 6% YoY to RO242.73 million), while the total assets of national insurers shed 5% YoY for general insurance. In terms of the insurers' returns on investments made, a YoY fall of 26% was observed. Net profits, too, took at 40% dive in 2015, to OMR15.57 million, as general and administrative expenses climbed 21% to OMR56.38 million in 2015. Total commissions and costs of production rose from OMR30.06 million in 2014 to OMR32.46 million at end-2015. And in terms of premiums, gross written direct premiums overall rose 11% to OMR442.08 million in 2015. Broken down, the gross direct premiums of general insurance rose 10% in 2015 to OMR389.12 million, while those of life insurance rose 27% to OMR52.95 million. A 25% YoY rise occurred in total paid claims to 290.72 million compared to OMR232.21 million in 2014. Paid claims for general insurance rose 26% YoY, while rising 16% for the life insurance segment. The volume of general and life policies issued in 2015 rose 6% to 1,436,365, comprising 1,401,177 general and 35,188 life policies.

Motor policies rose to 1,230,077 in 2015 up 5% YoY as comprehensive and third-party motor insurance policies respectively gained 1% and 6%.

Life insurance policies rose 11% YoY in 2015, as group life insurance policies of not less than one year climbed 22%, while individual life insurance policies of over a year rose 6%. The standout component for 2015 was health insurance policies, up 67%. Among other components, property, engineering, and other insurance rose 7%, 9%, and 25%, respectively, while liability insurance policies lost 4% and marine insurance policies were essentially flat for 2015. The sector's retention ratio in 2015 rose by 1ppt to 58%, where the ratio for national insurance companies was at 53% (up 2ppt YoY), and for foreign insurance companies fell 2ppt YoY to 72%. The local insurance sector is deemed to be sufficiently capitalized, on a capital-to-asset ratio (CAR) of above 30%, where as of 2014 on average, insurers retained around 55% of premiums generated with the remainder transferred to re-insurers.


Islamic financial products are on the rise globally, and their insurance component, takaful, is no exception. In 2015, takaful insurance accounted for 9% of gross direct premiums generated by Oman's insurance sector. The general takaful and gross direct premiums of this segment were at OMR38.77 million, up a notable 64% YoY from OMR23.69 million. The percentage of takaful insurance claims to the total paid claims was at 5% for 2015, where general takaful and family takaful insurance accounted for 5% and 4%, respectively. Meanwhile, the respective percentage of takaful to total insurance policies, total commissions and costs of production, total general and administrative expenses, and total assets was at 4%, 8%, 15%, and 9%. The retention ratio of the takaful segment was 50%, marking an 8% YoY decline, although the loss ratio for takaful insurance companies in 2015, at 38%, had declined by 4% YoY. For 2015, takaful accounted for roughly 6% of the total investments of insurance companies, where returns were up 19% YoY to OMR1.05 million in 2015 from OMR0.88 million. And completing the picture, the ratio of takaful in the total returns on the investments of all insurance companies stood at 10% for 2015.

Oman's insurance sector stands to face consolidation as the government seeks to pare it down to where lean insurers are capable both of generating revenue on the capital market and expanding their portfolios to retain a maximum volume of business in the country.