Weaker economic conditions and an estimated decline in the expat population of about 12% (close to 230,000 people) led to a decline in GWP in the Omani insurance market by 4%-5% in 2020, says S&P Global Ratings.
On a brighter note, the market is expected to report a significant improvement in profitability of about 50% in 2020 versus 2019, thanks to fewer claims because of strict COVID-19-related lockdowns, Mr Emir Mujkic, director - lead analyst, Insurance Ratings at S&P Global Ratings, says in the report, “GCC Insurers In 2021 - Robust Capital Supports Credit Quality”, released last month.
Looking ahead, Mr Mujkic said, “Although Oman is planning to implement a new compulsory health insurance scheme that should boost GWP in the coming years, he forecasts a further modest decline in GWP in 2021.”
He added, “In 2021, profitability will likely decline due to a more normalised level of claims and potential volatility on the asset side. The government will introduce a value-added tax of 5% from April 2021, which could create additional one-off costs for insurers. Nevertheless, we anticipate the market will report a combined ratio of 92%-95% in 2021.”