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CMA issues new regulation to organise insurers’ investments

13 Dec 2020

The Capital Market Authority (CMA) issued a new organisational regulation to organise the investment of insurance companies’ assets and Takaful insurance. The new regulation is set to meet the Omani insurance market development, which adds sufficient flexibility for the companies to be able to diversify investment opportunities and face market volatility. 

It contributes to strengthening the insurance companies’ investments, both the traditional and Takaful, and enhance the financial centres that qualify it to be able to compete and absorb more risks, thus maximising the amount of the invested funds in the local economy. 

The decision issued by H E Abdullah bin Salim al Salmi, executive president of the CMA directed all the companies to work on conciliating its conditions according to the regulation’s requirements during one year, according to a press statement published on the CMA website. 

H E Salmi said that adopting this regulation comes by the continuous revision of regulations and procedures that the authority approved to ensure the alignment and consistency with the developments and absorb the needs of the special conditions that are required in this critical period of economic growth that the sultanate is experiencing in the neo-renaissance process. “This comes in the frame of creating suitable conditions to start executing Oman’s Vision 2040. In addition to the principal activity of providing insurance coverage for individuals, properties, and economic activities, insurance and Takaful companies are also considered important investment institutions that invest the premiums collected from different economic activities to protect the policyholders’ rights and maximising returns on investments that are considered an important component in developing and expanding these companies. For these reasons, the authority redrafted the regulation in coordination with the companies and the effective institutions working in the sector to give more flexibility for the companies to direct its investments in order to achieve the desired objectives by the companies by achieving the development, expansion and provide the reserves and sufficient liquidity to face possible claims by insurance policyholders, ensure insurance companies’ efficiency and power and achieve financial sustainability,” H E Salmi said in the press statement.

H E Salmi clarified that the regulation in its new drafting came after identifying the insurance companies’ investments facts existing in the sultanate and evaluating the companies’ abilities to face the investment opportunities volatility in addition to conveying the sector’s variations and development. 

The new regulation provides Takaful insurance companies with the chance to invest in new investment instruments that comply with the legal provisions like deeds and Islamic investment funds according to the specified percentages and terms whether inside or outside the sultanate, according to the CMA.

The new regulation indicates that the insurance companies’ investments shall not be in the bank deposits and investment agencies at the authorised banks and financial enterprises from the Central Bank of Oman, bonds, and governmental deeds less than 30 per cent from the total investments but shall not exceed 50 per cent of the total company’s bank deposits. The company’s investments in the deeds and commercial bonds inside the sultanate shall not exceed 35 per cent according to the specified terms. 

The new regulation allows an insurance company to invest in the joint stock companies, investment funds and the companies not included in the market shares by not exceeding 40 per cent of the total investments and also according to the specified terms. The regulation will also allow investing in the loans secured by insurance policies on life and properties and shall not exceed the investment percentage 20 per cent from the total insurance companies’ investments and the investment shall not be in the real estate speculatively. The investment percentage in real estate may increase according to the specified conditions that do not exceed 30 per cent after the authority’s agreement.

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