Capital Market Authority (CMA) has directed insurance companies to extend the insurance coverage up to 70 years for the loans of pensioners affected by a recent circular.
This follows discussions about the difficulty of rescheduling the loans of retirees in accordance with the Diwan Circular No 6/5/2020. Loans were covered until 60 years of age as per the applicable regulations considering the importance of insurance coverage for borrowers and financiers.
CMA and the Central Bank of Oman considered the possibility of offering incentives and adequate flexibility for the loans of Omani employees who retired under the Diwan Circular which instructed to retire not less than 70 per cent of the Omani employees working for government units whose service term covered 30 years.
Hence, CMA directed the insurance companies to extend the recovery period insurance coverage to 70 years for the loans of those affected by the circular.
It is noteworthy that the insurers consented to cooperate and extend the insurance coverage for death and disability up to 70 years for borrowers and to consider the borrowers on specifying the new insurance premium and not to charge additional amounts or administrative fees.
For individual cases, they consented not to deem the extension of the coverage for the retirees affected by the circular as new policy if the loan amount is not increased, but to be treated as extension only.
Insurance coverage on the life of borrowers is an essential element to protect the parties from expected risks, such as death or disability preventing the borrower from work and payment of monthly loan instalments and therefore default in payment of the loan, in addition to its importance for the financing entities.
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