The Financial Services Authority (FSA) has issued administrative decision (1/2026) approving new regulatory amendments to the Unified Motor Insurance Policy Model, introducing a package of benefits aimed at expanding insurance protection for motor insurance policyholders and enhancing the quality of services provided.

The regulatory amendments include the introduction of specific timeframes for claims settlement and the simplification of related procedures. The revised policy now provides automatic coverage for material damage to insured vehicles resulting from natural disasters and climatic events, which applies to all motor insurance policies, including third party motor insurance. The FSA has worked closely with insurance and reinsurance companies to ensure that the cost of this new coverage is aligned with the expected level of risk.

The revised policy introduces a new provision for compensation in cases of delays in vehicle repairs beyond the specified timeframes, in accordance with regulations to be issued by the FSA at a later stage. It also allows policyholders the option of receiving cash compensation for the value of damage resulting from an accident, instead of having the insurance company undertake the repair of the vehicle.

It further confirms regulatory amendments to the list of consumable spare parts that must be replaced with new parts without any depreciation deductions, expanding the list to 37 items. The decision grants insurance companies a period of 30 days from the date of its publication to implement the new regulatory amendments, allowing sufficient time to complete the necessary technical and operational requirements and to ensure smooth implementation in a manner that supports market readiness and safeguards the rights of all parties.

H.E. Abdullah bin Salim Al Salmi, Executive President of the FSA, stated that the new regulatory amendments to the Unified Motor Insurance Policy form part of the FSA’s methodology of continuous review of the legislative and regulatory framework governing the insurance sector, with the aim of ensuring adequate insurance coverage. He noted that the regulatory amendments shed light on the FSA’s core role in assessing the effectiveness of existing regulatory practices, with a view to further developing the efficiency of the motor insurance market in line with current requirements and the public’s need for insurance services.

Al Salmi explained that the inclusion of an addendum providing natural disaster coverage under third party motor insurance is based on a realistic assessment of the impacts of climate related changes experienced by the Sultanate of Oman in recent years. This, he noted, underscores the need to expand the role of insurance as an effective tool for managing climate risks and mitigating their effects, thereby providing greater protection and supporting broader social and economic stability.

He further indicated that the recent amendments are expected to deliver a range of economic and social benefits, most notably strengthening the national social protection framework, part of which is funded by insurance companies. The regulatory amendments will enhance societal preparedness to address climate risks, improve recovery capabilities following natural disasters, and support financial stability and economic sustainability for individuals and institutions alike.

He added that, in developing these amendments, the FSA was keen to strike a careful balance between providing broader insurance protection for motor policyholders and ensuring the stability and sustainability of insurance companies, enabling them to meet their obligations to policyholders. He also noted that the amendments are expected to reduce complaints and disputes among insurance stakeholders, while introducing regulatory provisions that promote financial inclusion by simplifying procedures and improving insurance services through stronger governance of regulatory processes between policyholders and insurance companies. This, in turn, will help minimise disputes and enhance overall confidence in the sector.

Provisions for natural disaster coverage

The Unified Policy Model includes clear regulatory provisions governing the mechanism for natural disaster coverage under compulsory motor insurance (third party). The addendum provides insurance coverage for loss or damage to material property resulting from natural disasters, as declared by the competent authorities in relation to emergency situations. Under the terms of the addendum, vehicles that sustain damage will be compensated up to a maximum of RO 5,000 per vehicle, after deduction of the deductible and the coverage reactivation amount. The provisions of the natural disaster addendum under compulsory insurance further clarify that the market value of the damaged vehicle will be determined based on its value prior to the occurrence of the damage, in accordance with the conditions specified by the FSA.

With regard to total or constructive total loss of the damaged vehicle, the legislator has regulated compensation under two scenarios. In the first scenario, which applies to vehicles with a market value of less than RO 5,000, the insurer may compensate the insured based on the market value of the vehicle, with the vehicle salvage transferred to the insurer. Alternatively, the insurer may compensate the insured at 75 per cent of the vehicle’s market value, subject to a maximum of RO 5,000, if the policyholder wishes to retain the salvage. In the second scenario, which applies to vehicles with a market value surpassing RO 5,000, compensation is set at 75 per cent of the vehicle’s market value, if the compensation does not surpass RO 5,000, with the policyholder retaining the salvage.

In cases of partial loss, the insurance company shall bear the cash cost of repairs up to a maximum of RO 5,000, unless the vehicle is deemed to fall within the definition of constructive total loss. The policy also clarifies the mechanism for determining the cost of partial loss, which will be based on a report issued by one of the loss adjusters and assessors licensed by the FSA, in accordance with the rules approved by the FSA in this regard.

In order to regulate compensation processes, enhance self supervision, and ensure compliance with road safety requirements when using vehicles under exceptional conditions, the legislator has specified a number of exclusions that are not covered under the natural disaster addendum for third party motor insurance. These exclusions include damage to property inside or outside the vehicle, damage resulting from traffic accidents unless caused by a natural disaster, and damage resulting from vandalism, fire, intentional acts, or theft. The addendum also excludes cases where vehicles are left in wadi channels or in locations or roads subject to warnings issued by the Royal Oman Police, cases of deliberate exposure of vehicles to the risk of flooding without adherence to safety and security standards, vehicles bearing non Omani registration plates, and damage sustained as a result of driving the vehicle after the occurrence of damage caused by a natural disaster.

Compensation for delays in vehicle repairs

The introduction of a provision for compensation for delays in vehicle repairs is considered one of the most significant regulatory enhancements included in the new amendments to the policy. This provision aims to strengthen insurers’ compliance with agreed repair timelines and to reduce insurance related complaints and disputes. Where repairs are delayed beyond the specified period of 30 days from the date of completion of the accident file, the insurer shall be obliged to pay cash compensation to the policyholder or the affected party for each day of delay, in accordance with the regulations to be issued by the FSA. This obligation does not apply in cases where new spare parts are unavailable from the authorised dealer, where the vehicle owner refuses to collect the vehicle after completion of repairs, where the insured refuses to commence the repair process, or where additional repairs unrelated to the accident are requested.

Among the key improvements introduced by the policy is the option granted to the policyholder or the affected party to receive cash compensation under clear rules that ensure fairness and transparency for all parties. The compensation amount is determined based on the lowest priced repair quotation submitted by approved workshops. To ensure that repairs are carried out and to reduce the risk of insurance fraud or misuse of compensation amounts, payment will be made in two instalments, with 70 per cent of the compensation paid prior to the repair and the remaining 30 per cent paid upon completion.

In order to ensure the quality of insurance services and the proper execution of repair works for vehicles damaged in accidents in accordance with high safety standards, the amendments also increase the number of new spare parts included within the list covered by insurance to 37 items.