Insurance premiums increased by 5% to RO 485.5. Takaful’s share 13% of the portfolio
- Retention ratio of premiums increased to 60.5% concentrating in health insurance at 73.1% and motor insurance at 91.4%
- Average growth of health insurance in the past five years about 4%
- Properties insurance grew by 31% in 2019 with gross premiums RO 63.8%
- RO 324.5 paid claims by insurers
- Health insurance has biggest share in second consecutive year at 34.3% followed by motor insurance at 26.6%
- Total assets of insurance companies in 2019 increased by 2% to RO 1.125 billion
Audited financial statements of the insurance sector for 2019 show that gross direct premiums of the sector increased by 5% to RO 486.5% at the end of 2019 compared to RO 463.5 at the end of 2018. The sector’s indicators show that average growth of insurance premiums in the past five years reached 4%. Direct gross premiums of general insurance increased by 5% to RO 425.8 million in 2019 compared to RO 403.9 million in 2018. General insurance’s share was 87.5% of the total insurance portfolio accompanied by increase in gross direct premiums of life insurance by 2% to RO 60.7 million in 2019 compared to RO 59.6 million in 2018. Life insurance’s share was 12.5% of the total insurance portfolio. Takaful products recorded growth in direct premiums at 20% during 2019 compared to the previous year. Takaful share was 13.2% of the total insurance portfolio at about RO 64 million.
Insurance Products
Despite the unfavorable circumstances, slow growth and recession in the past years, insurance premiums witnessed remarkable growth due to increased awareness of the economic and social importance of the insurance as it takes priority in the administrative expenses of institutions to hedge the risk and safeguard the wealth as well the public’s confidence in the insurance market in Oman thanks to well organized and regulated market for the protection of all stakeholders and relationship between the insured and insurers.
With regard to insurance products and their representation in the total insurance portfolio, the indicators show that most insurance products have witnessed increase in the volume of insurance premiums except motor insurance which decreased by 10% and liability insurance which decreased by 5%. This type of insurance provides cover for legal liability for claims by third parties to compensate for the loss resulting from accidents to properties and bodily injuries or death related to third party.
On the other hand health insurance products recorded good levels of growth to reach 24% during the period 2011-2019. Such growth was reflected in the size of the health insurance in the total insurance portfolio. Health insurance represents the biggest share in the total market share for the second consecutive year taking 34.3% at RO 167 million replacing the motor insurance which was the market leader in the history of the Omani insurance market.
The expansion of the health insurance commenced before Oman implementing compulsory health insurance like the motor insurance, therefore, we expect the insurance to witness greater growth in response to the Government’s policy during the coming period in which health insurance will be compulsory for the employees of the private sector, residents and visitors. The number of insured Omanis and expatriates during the past years was 490,000 and the number expected to be covered after implementation of the compulsory insurance (Dhamani) will exceed one million persons.
A glance to the properties insurance reveals that such insurance has witnessed considerable growth in 2019 at 31% with a share of RO 63.8 million compared to RO 48.6 million in 2018 after the drop these products witnessed during 2017 at 12% they increased considerably in 2018 to 22%. Average growth during the five years was 6%. It is noteworthy that properties insurance covers properties against loss and damage and is different from the marine, aviation, transport and motor insurance. The increase was due to increased turnout on properties insurance such as homes, buildings, roads etc. which could be affected by unusual climates especially Oman has witnessed in the past years exceptional climate conditions that caused damage to properties due to its geographical location near the Indian Ocean and the Arabian Sea.
Claims
With respect to claims paid by insurance companies to mitigate the effects of the risk to the individuals and institutions, the indicator show that the sector plays a great role in safeguarding the activities of the institutions in the various economic sector beside its role in safeguarding the individuals to ensure sustainability and development and protecting the wealth. Insurance companies paid RO 324.5 million in claims in 2019 in addition to the claims paid by reinsurers. Compared to the claim paid in 2018 the audited financials show the claims paid in 2019 decreased by 16%.
Performance of the Insurance Companies
Insurance companies enjoy strong financial position to play a greater role in accommodating the volume of the economic activity in the Sultanate and to provide adequate protection from the expected risk to individuals and institutions specially after increasing the minimum limit of the capital of national insurance companies to RO 10 million in the amendments to the Insurance Companies Law under Royal Decree No. 39/2014 which aimed at enhancing the financial ability of insurance companies with their capital reaching about RO 254 million at the end of 2019. As to the level of investment performance of insurance companies they witnessed considerable increase at the end of 2019 with investments at more than RO 754 million compared to RO 621 million in 2018 increasing by 21% which is good indicator compared to the investment performance of the other economic sectors. The proceeds of investments of insurance companies in 2019 increased by 29% to about RO 23.9 million compared to RO 18.5 million in 2018. Retention ratio of insurance companies in 2019 was about 60.5% increasing compared to 2018 in which the retention ration was about58.7%.
The number of insurance companies licensed to carry out insurance business is 20 companies plus Oman Reinsurance Company. There was 35 licensed brokers at the end of 2019 and more that 145 insurance agents in the Wilayats and Governorates of the Sultanate.