Oman Insurance Report Q2 2012

Business Monitor International
April 24, 2012
63 Pages - SKU: BMI3891323
Countries covered: Oman

As of March 2012, it is clear that 2011 was not a vintage year for Oman’s small, fragmented and highly competitive insurance sector. Although the premium growth varied markedly from company to company, we think that the overall business written, in both of the main segments, increased by around 13%. Retention rates are low (often well below 50%). Motor-related claims remain unacceptably high. Volatility in financial markets, in Oman and generally, curtailed investment earnings.

Taking the longer-term view, we do not see obvious catalysts for an increase in either non-life penetration or life density. Meanwhile, Oman’s insurance sector continues to compare unfavourably with its peers in other Gulf Cooperation Council (GCC) countries. Twenty-one companies, including 10 local groups, are competing for total premiums that are still less than US$700mn per annum. As is the case in the rest of the region, none of the local companies have the benefits of economies of scale, nor, with the clear exception of al-Ahlia which is an affiliate of global non-life major RSA Insurance, are any owned by major shareholders that have a clear competence in insurance.

In most countries in the Middle East and North Africa (MENA), small local groups tend to focus exclusively on non-life lines (particularly the ‘basic’ areas such as motor and home/contents insurance). Oman is unusual in that most of the local groups are composite insurers. Even al-Ahlia offers group life products. The regulatory regime dates back only to 2004. To date, Oman’s insurance sector has not participated in the growth of takaful – a key factor in the expansion of the much larger industries in the UAE and Saudi Arabia: nevertheless, the Capital Markets Authority (CMA) has given an in-principle approval to the establishment of the Sultanate’s first shari’a-compliant insurance company.

A strength is that the market is clearly open to foreign players. Majors that are present include AXA Gulf, Chartis and, since October last year (through its purchase of Compagnie Libanaise d’Assurance), Zurich, as well as MetLife ALICO. LIC and New India are serving Indians who live and work in Oman. There are also offshoots of much smaller firms based in the UAE and Lebanon.



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