The insurance market in Oman is projected to reach US$2.1 billion in 2021, which translates into a five-year CAGR of 12.1%, according to Alpen Capital in a report.
Growth in the life segment is expected to be the highest, supported by a rising population (+3.1% annualised average growth), implementation of mandatory health insurance from 2018 and wider economic development. The country is witnessing a series of construction projects in logistics, ports, railways and tourist attractions in a bid to diversify revenue sources.
Additionally, amendments to the insurance law in 2014 require insurers to double their capitalisation level, from OMR5 million (US$12.9 million) to OMR10 million. The move improves the risk-taking ability of the insurers and thereby expands underwriting business. Given the developments, insurance penetration and density in the country are projected to reach 2.4% and US$ 453.1 by 2021, says the report.
The insurance sector in Oman grew at an average annualised rate of 10.3% between 2011 and 2016 to $1.2 billion, the third fastest growth in the GCC. The expanding market is mainly attributed to the rapid rise in the health insurance segment.
The share of health insurance in non-life GWP grew from 18.1% in 2013 to 30.3% in 2016, on the back of increasing use of healthcare facilities and growing awareness about the benefits of insurance among the people. Moreover, subscriptions have increased ahead of the forthcoming mandatory health insurance in the country. In September 2017, ministers approved a plan to introduce mandatory health insurance for private sector expatriates from 2018.
The largest business line continues to be motor insurance accounting for over 40% of the non-life GWP due to compulsory third-party liability insurance. The share of property insurance business has dropped over the years owing to a slowdown in construction activity. Other key business lines of marine and engineering also witnessed a decline in the last couple of years due to a lacklustre business climate. Consequently, the non-life GWP – making up 88.0% of the total insurance GWP – grew at a CAGR of 11.4% between 2011 and 2016.
On the other hand, the life segment grew at a slow pace of 3.5% and formed a small portion of the insurance market. During 2016, growth in life segment slowed due to severances in the construction industry resulting in reduced life insurance contributions for employees.
The segment though is likely to grow in the coming years with the rise of family takaful, alongside, the enactment of the new takaful framework in March 2016.
Oman’s insurance industry comprises 11 national companies, of which two are takaful providers, and 11 foreign companies. More than half of the country’s GWP in 2016 was generated from the top four players – National Life Insurance and General (22%), Dhofar Insurance (12%), Axa Insurance (11%) and Oman United Insurance (9%).