Insurance Sector Performance in three quarters of the financial year 2017

Gross Premiums in the third quarter RO 358.16 million

Health insurance grew by 17%

Gross Direct Premiums

Unaudited financial data issued by the Department of Audit and Financial Analysis at CMA indicates the insurance sector in the Sultanate has continued growth in the gross written premiums during the three quarters of 2017 compared to the same period in 2016 with varying ratios.

Direct gross insurance premiums during the three quarters of 2017 have increased by 0.3% compared to the first three quarters of 2016 at RO 931,000 to RO 358.16 million compared to RO 357.23 million during the same period in 2016.

Although the rwritten premiums have generally increased during the period  , however, most insurance branched have witnessed varying decrease except the health insurance and group life insurance which recorded an increase at 17% and 25% consecutively. The decrease of most insurance branches is attributed to the expenses rationing policies  which was evident in engineering insurance which witnessed a reduction at 3% compared to the same term in the past year. This branch has witnessed  in 2016 a decrease according to the audited insurance indices at 25% as well as transport, property, motor, individual life and liability at 19%,7%,8%, 21% and 3% consecutively while other branches have decreased by 6%.

Representation of  Products

The indices show that direct premiums of motor insurance products represents 33% of the gross insurance premiums compared to health insurance which represents 31%. Motor insurance products  still maintains the leading position as regards the volume of representation in the total insurance market, however,  health insurance has contributed to enhanced representation approaching the level of motor insurance. The audited data in 2016 suggest the average growth of health insurance in the Sultanate in the past five years was 34% and is expected to witness further growth due to the Government’s policy to implement compulsory health insurance for all the employees of the private sector.

Written Premiums

The slight increase  achieved by the sector  in the gross direct written premiums in the three quarters of 2017 has reflected positively on the gross net direct premiums after reinsurance processes. Gross net direct premiums have increased during the three quarters of 2017 at 1% compared to the same period in the previous year.

Properties and engineering insurance have achieved the highest ratio in premiums at 19% and 18% consecutively compared to the same period in 2016 while the individual life insurance and other insurance recorded the highest ratio of decrease in the insurance companies’ retention to 19% and 13% consecutively.

As to the distribution of the insurance products’ sharer in the gross direct written premiums, the motor insurance, both  comprehensive and third party, have recorded the top place as regards the volume of direct written premiums after reinsurance at 50% followed by the health insurance at 30% which reflect the ability of insurance companies to accommodate the risks of such  branches while the net share of insurance products of transport, properties, engineering and liability are still low compared to the gross direct premiums on the bases that the retention ratio of each branch doesn’t exceed 2% of the gross premiums due to the cost of indemnities paid by the insurers for such branches which are very high and exceed the capital of the insurers sometimes, hence the insurance companies resort to reinsurance companies to cover such risks which is sound practice in the global insurance market. CMA endeavors to enhance the financial positions of the insurance companies operating in the Sultanate to be able to reach better retention ratios and to expand their abilities to cover greater risks through increasing  the minimum capital to RO 10 million and transforming the national companies into public joint stock companies.

Retention Ratio

Retention ratio for properties, transport and engineering insurances are the lowest compared to other branches of insurance at 14%, 21% and 21% consecutively due to reinsurance of greater part of the risk with reinsurance companies.

Retention ratio of motor insurance (comprehensive and third party) is the highest among various insurance branches at 88% for third party insurance and  85% for comprehensive insurance. It is noted that retention ratio of individual life insurance has recorded 68%.

Operational results

The amount of written premiums in the three quarters of 2017 has increased by 10% compared to the same period in 2016 . Gross written premiums were RO 196.9 million during the three quarters of 2017 compared to RO 178.4 during the same period in  2016. Net indemnities were RO 131.12 million during the three quarters of 2017compared to RO 124.2 million in the same period in  2016.

Total commissions insurance companies have received from reinsurers for reinsurance have increased to RO 20.92million during the three quarters of  2017 compared to RO 19.51million  during the same period in 2016.

Production costs have increased by 5% during the three quarters of 2017 to RO 42.12 million compared to RO 39.94 million during the same period in 2016.

Largest Five Companies

National Life and General Insurance   is the largest with a share in the direct premiums in the three quarters of 2017 at RO 90 million (25%) followed by Dhofar Insurance at 10% and Oman United Insurance at 9% then Axa Insurance at 8% then Al Madinah Insurance at 6%.

There were 20 insurance companies at the end of the third quarter of 2017 after the merger of Arabian and Falcon Insurance and Muscat Insurance with Muscat Life Insurance. There were 10 national insurance companies and 10 foreign companies in addition to one reinsurance company namely Oman Reinsurance. The number of brokers was 38 and the agents were 112 at the end of the third quarter of 2017.

Employees of the Insurance Sector at the end of  the third quarter of 2017

The number of employees of the insurance sector was 2987 including 1988 Omani employees at 67% and the number of expatriates 999 at 33%. Omanization ratio was 71% and 58% in insurance companies and brokers consecutively and 52% in insurance agents. Insurance companies recorded 76% Omanization ratio followed by brokers at 17%.