Oman: Takaful players expected to fight hard for health business
Source: Middle East Insurance Review | Dec 2017
Oman’s takaful sector is likely to benefit from the new mandatory health insurance system that will be implemented with effect from next January, along with their conventional counterparts, according to a report released by S&P Global Ratings.
However, given their relative lack of scale, Oman’s takaful insurers are going to have to fight hard to be successful in medical insurance.
The Omani takaful sector is still at an early stage, with only two players, which contribute around 10% of the total gross premiums of Oman’s insurance market in 2016. Although the first year of operations was only in 2014, the sector’s presence has already been felt in the form of increasingly competitive premium rates, the ratings agency said.
Health insurance premiums in the takaful sector have grown at a significant rate of 166% in 2014, 109% in 2015, and 36% in 2016. Nevertheless, the premium base is still small and there is significant potential for it to grow, especially on retail lines, S&P said.
With motor business linked to general economic conditions, the agency believes that takaful players will focus on health insurance to grow their size.
However, in the GCC regional markets, the bigger players tend to monopolise the large medical contracts as their scale allows them to negotiate some fairly substantial discounts from hospitals, clinics, and other healthcare institutions, which allows insurers to offer very competitive tariffs in group medical relative to smaller peers. Also, employers will generally look for the cheapest covers that are administered efficiently and without complaints from their employees or regulators. M