Oman United Insurance Co is planning to launch takaful operations and its board of directors has agreed in principal to incorporate a company to handle Sharia-compliant insurance products.
"The board of directors has agreed in principle to incorporate a takaful insurance company and suggested to discuss this in the annual general ordinary meeting scheduled on March 28, 2013 for consideration and approval," the company said in a disclosure to the Muscat Securities Market on Tuesday.
The board also recommended a cash dividend of 15 per cent of the paid up capital, or 15bz per share, at its meeting held on Monday.
Speaking to Muscat Daily, Nassir bin Salim al Busaidi, managing director of Oman United Insurance, said that the company will likely get an approval at the annual general meeting in March and will then submit the application for the preliminary approval of the Capital Market Authority (CMA).
He said, "The amount of capital required to float the company will be decided once we meet initial CMA requirements. However, the minimum capital requirement to set up a takaful firm is RO10mn, but that will be decided in discussions with CMA."
He added that a takaful company will initially help Oman United retain its existing customers who want Islamic insurance products and then acquire new customers as well.
Busaidi said that there will be good demand for Islamic insurance products in Oman, but not in the first year of operations.
"The demand for takaful products will grow gradually. This is something new for the people here and will take time to grow," he added.
CMA, which regulates the insurance sector in the sultanate, does not allow companies to operate takaful windows. Companies looking to offer Islamic insurance products need to convert to exclusive takaful firms or set up separate companies.
The market regulator has already issued three in principal approvals for takaful operations.