Ahmed Al Maamari: Insuring latent defects of buildings enhances the quality and safety of real estate projects and ensures their sustainability

The Executive Vice President  of the Financial Services Authority, Ahmed Ali Al Maamari, emphasized that latent defects insurance product for buildings has become a  requisite for real estate developers, financiers, owners and even tenants, in view of the exceptional urban development witnessed by the renewed Omani renaissance.

He added  that the size of the contribution of the contracting and construction sector to the Omani gross domestic product in 2023 was  9.1%, which shows the extent of the need to hedge investments in the construction sector through insurance products that contribute to enhancing the quality, safety and sustainability of real estate projects and stimulate investment in the sector.

This came in the opening speech delivered by Al Maamari in the workshop organized by the Financial Services Authority on "Insurance of Latent Defects for Establishments" today, Wednesday, January 15. The workshop aims to exchange experiences and ideas and benefit from the experience of the Kingdom of Saudi Arabia in providing latent defects insurance product. Latent  defects are inherent defects in  construction works or their protective elements that weaken the strength or  stability of the building and are the result of errors, faults or deficiencies in the design, materials, soil examination or construction, provided that such defect has not been discovered on the date of issuance of the building completion certificate.

Speakers from the Ministry of Municipalities and Housing in the Kingdom of Saudi Arabia, Malath Insurance Company and Tuf Sud Technical Inspection Company participated in the workshop and attended by representatives s from government entities  in Muscat Municipality, Dhofar Municipality, Masandam Municipality and other governorates municipalities of  the Ministry of Interior, in addition to the presence of representatives of the Omani Real Estate Association, insurance companies, contracting companies and engineering consulting firms.

Al Maamari said in the opening speech that organizing the workshop comes within the FSA's efforts to support innovation in designing and providing qualitative and advanced insurance products that aim to meet the needs of individuals and institutions in various economic sectors. These awareness meetings also confirm the essential role played by the insurance sector in providing insurance products that limit the risks of any sector and provide the necessary tools to ensure the financial sustainability of institutions operating in these sectors, including the real estate sector, in addition to its role in protecting the rights of individuals. He pointed out in his speech that learning about the experience of our brothers from the Kingdom of Saudi Arabia will undoubtedly contribute to gaining a comprehensive vision of the type of product that will be provided to the Omani real estate market.

The workshop included a detailed presentation on the Kingdom of Saudi Arabia's experience in implementing the mandatory insurance for latent defects in buildings, which is considered a pioneering and advanced model in the region.

Mohammed Ibrahim Al Malhem, Undersecretary of the Ministry for Licensing and Project Coordination at the Ministry of Municipalities and Housing in the Kingdom of Saudi Arabia, provided a detailed review of the methods of implementing this type of insurance in the Kingdom. He reviewed the benefits achieved by the scheme, the key challenges faced during the implementation stages and how they were dealt with to ensure achievement of the desired goals.

The workshop concluded with a discussion session in which the participants discussed the basic and additional benefits  of latent  defects insurance and the extent to which it can be implemented in the Sultanate of Oman, with a focus on the importance of cooperation between government entities  and private sector companies to provide an appropriate environment that encourages the adoption of such initiatives that contribute to raising the efficiency of the real estate sector and enhancing confidence in it, which supports the national economy and keeps pace with the future visions to achieve Oman Vision 2040.