The coronavirus pandemic and decline in business activity have had a negative impact on the growth of Oman’s insurance market.
Total premiums of insurance companies in Oman decreased by 4.3 per cent to RO465.9mn in 2020 compared with RO486.6mn recorded in 2019, according to a report released by the Capital Market Authority (CMA) on Monday.
Gross direct premiums for general insurance decreased by 3.2 per cent to RO412.14mn in 2020 compared to RO425.88mn in 2019, while gross direct premiums of life insurance fell 11.4 per cent to RO53.75mn compared to RO60.7mn in the previous year, the CMA statistics showed.
However, the insurance sector’s contribution to the sultanate’s GDP increased to 1.87 per cent in 2020 compared to 1.66 per cent in 2019.
“Oman’s insurance sector demonstrated its ability to rapidly respond to the exceptional circumstances such as the pandemic. Insurance companies expanded their insurance umbrella for the holders of health insurance policies to cover all tests and treatment costs of COVID-19 patients, in line with the real objective of the insurance industry to protect the community from unexpected risks and consequent financial loss,” Abdullah bin Salim al Salmi, executive president of the CMA, said in his statement in the annual report.
Gross direct premiums of national insurance companies decreased by 4.4 per cent to RO384.63mn in 2020 compared to RO402.25mn in the previous year.
Health insurance segment represented the highest market share in total premiums of national insurance companies at about 36 per cent of the gross direct premiums. The market share of motor insurance stood at 25 per cent of gross direct premiums.
In contrast, gross direct premiums of takaful companies increased by 1.1 per cent to RO64.48mn in 2020 compared to RO64.16mn in 2019. Takaful insurance now represents 14 per cent of the gross direct premiums of insurance companies in Oman.
Despite a decline in total premiums, insurance companies in Oman received a profit boost for the year 2020, thanks to fewer motor and medical claims because of strict coronavirus-related lockdowns that cut the amount of traffic and accidents last year. Most of the Omani insurance firms reported robust growth in their profitability for 2020 versus 2019.
Total number of insurance policies (general and life) issued by insurance companies in Oman decreased by 15.1 per cent to 1.640mn in 2020 against 1.932mn policies in 2019, the statistics showed.
The number of general insurance policies fell by about 200,000 to 1.508mn at the end of 2020 compared to 1.708mn policies in the previous year, while number of life insurance policies dropped at 131,676 from 224,115 policies in the previous year.
According to the CMA report, retention ratio of insurance companies in 2020 stood at 56.5 per cent in Oman, decreasing from 60.5 per cent retention ratio in 2019. Retention ratio for motor insurance was highest at 87.3 per cent compared to other segments within the national insurance companies.
The report indicated that the overall Omanisation level in national insurance companies stood at 79 per cent at the end of 2020 while Omanisation within foreign insurance companies came at 81 per cent.