People can never know their fate, this thought crossed my mind while I was driving my car in the streets of Muscat.  Human beings have always looked at probabilities as enemies since the fear of the unknown has always crossed the human mind especially when it comes to the safety of themselves as well as their properties.   That being said, modern civilized human beings have created an economic system known as insurance to avoid depending on such probabilities.  You can imagine the importance of insurance in our daily lives with a simple and common scenario, people driving a vehicle after the expiration of its insurance policy. They may have postponed their vehicles’ insurance for a day or two, trusting the circumstances, chances and safety probabilities, or, at best, purchased a third-party insurance policy to save the costs, without realizing that easy solutions are of a less quality and security in critical occasions.  We can take a moment to imagine the different scenarios of similar incidents.  The financial loss resulting from such scenarios could include medical treatment of both parties, paying Diyah (blood money) in the event of death, paying for public property damages and paying the costs of repairing the vehicle.  Such financial losses come along with legal arrangements and psychological burdens.  

Individuals’ need for insurance stems from their natural instinct to feel safe against any expected or unexpected risks and here comes the role of insurance companies as the entity responsible for compensating individuals depending on the size of damage or loss.

Nowadays, individuals are prone to accidents and crises that might be resulted from natural risks or human errors since they are able to move and travel easily.  In a country like Oman, climate studies indicate dramatic changes in the weather like high rates of temperature and sudden changes of the climate; which sheds the light to another source of risks, nature.  This means that risks to be insured are not compulsory to human errors, as in the case of accidents, but also they are related to natural disasters. This require insurance against natural disasters which covers houses and vehicles.  

Yet we are all aware that the prevailing social culture may sometimes show a kind of reservation towards insurance companies and their economic philosophy. Some even see these companies as exploitative entities, but do the facts agree with this view?

Economic realities reflect a different image of this view. It is enough to imagine an individual's entire life, including all assets and properties, is free of any insurance cover against any unexpected risks.  The absence of an insurance policy means that the individual risks all of his or her material achievements and possessions, health and sense of security as he or she are prone to loss at any moment. 

The criticality of this problem becomes evident when the individual calls for help from other people and charities all while feeling helpless and unable to meet the costs.  After disasters, some claim to the government for compensation. This comes as a result of error, omission or negligence. This highlights the real social need of insurance companies, not as profitable businesses, but as a means of social solidarity that protects the individual and society when facing such incidents.  The government, represented by the Financial Services Authority (FSA), supervises and regulates the insurance companies' function and policies.   The FSA takes a vital role in protecting the rights of the Insured. Finally, it is important to note that insurance is a form of culture that requires the individual to be fully aware of the terms stipulated in the insurance policy.  The last is considered a prerequisite in the preventive system of any society that seeks to continue its activities with sense of financial and moral security.

Written by: Salim Al Rahbi