The Omani insurance industry grew at a 9.6% compound annual growth rate (CAGR) during the period 2011-2016, with total premiums written hitting OMR450.2 million (US$1.2 billion) in 2016, according to a report from the Capital Market Authority.
The growth of the life and non-life insurance sectors showed a CAGR of 44.4% and 9.8%, respectively, during the period 2011-2016.
There are 23 companies offering insurance in the Sultanate, including one reinsurance company and two takaful operators.
Five insurers dominate Oman’s insurance sector, four of which are domestic and one foreign, with about 60% of total written premiums.
Overall claims rose at an annual growth rate of 9% during the period 2011-2016. Life insurance and non-life insurance claims rose at an annual growth rate of 1% and 10.4%, respectively, over the period 2011-2016.
Total claims paid in 2016 decreased by 8% y-o-y to OMR268.32 million in 2016 compared to OMR290.72 million in 2015.
In 2016, the insurance penetration rate in the Sultanate was 1.61%. Life insurance coverage was 0.24% and non-life insurance coverage was 1.37%. The level of life insurance prevalence is still very low in Oman.
However, it is expected to increase over the long term due to increased purchasing power and the emergence of family takaful. One indication of the potential growth in this class of business is shown in the unaudited financial statements of insurers for the first quarter of this year. Total premiums rose by 3% to OMR134.7 million in the first quarter of 2017 compared to the same period last year. The increase was due to demand for life insurance products and health insurance, in addition to other products.
Non-life business has benefited from the strong momentum in the construction, infrastructure and vehicle sectors. A large part of Oman’s oil revenues is diverted to develop the non-oil sector in order to support economic diversification. This gives a strong boost to the construction sector and thus to the non-life sector.
In addition, the medical insurance market is growing in Oman. If the government makes health insurance mandatory, insurers in the Sultanate will benefit from the opportunities made available. In the non-life segment, premiums written on vehicles (comprehensive and third party) accounted for 35.1% of total premiums written in 2016.
Local vs foreign
Direct written premiums of local insurers fell by 1% to OMR330.78 million in 2016 compared to OMR332.83 million in 2015. However, direct written premiums of foreign insurers grew by 9% to OMR119.45 million in 2016 compared to OMR109.25 million in 2015. This was the result of a 103% increase in direct written premiums for life insurance to OMR41.96 million. Overall, total direct premiums grew by 1.85% to OMR450.2 million in 2016 compared to OMR442.1 million in 2015.
Vehicle insurance accounted for the highest percentage of total direct premiums of local companies with a contribution of 36% of direct premiums written for 2016.
Life insurance accounted for the highest percentage of total direct premiums of foreign insurers at 35%.
Net profit in the insurance industry fell by 44% in 2016 compared to the previous year. Net gains reached OMR8.74 million in 2016 compared to OMR15.57 million in 2015.
Local insurers saw their net profit plunge by 72% in 2016 to OMR3.4 million, compared to OMR12.2 million for 2015. Among local insurers, the profits of conventional insurers shrank by 60.4%, while the losses of takaful operators almost doubled to reach OMR1.8 million in 2016 compared to OMR0.9 million in 2015.
In contrast, foreign insurers posted an increase in net income of 58% to OMR5.3 million in 2016, compared to OMR3.4 million in 2015. M
OMR1 = US$2.60