Muscat – The Insurance market in Oman is expected to reach US$1.5bn in 2026, registering an annualized growth rate of 3.9 per cent over the next five years, according to Alpen Capital, a leading investment banking advisory firm in the Middle East.

The life insurance segment in the sultanate is expected to grow at a compound annual growth rate (CAGR) of 5.8 per cent over the five-year period until 2026, the fastest in the region, according to GCC Insurance Industry report published by Alpen Capital.

‘Growth in Oman’s insurance market will be largely driven by a strong rise in population at a CAGR of 3.1 per cent between 2021 and 2026. Meanwhile, the non-life insurance segment is expected to grow at a CAGR of 3.7 per cent to reach US$1.3bn in 2026,’ the report said.

The implementation of mandatory health insurance from 2020 and continuation of health cover by Omani employers will support the growth of the non-life segment, Alpen Capital added.

The sultanate’s universal health insurance plan is being implemented in five stages with application of the mandate to foreign visitors in the first stage, foreign workers in the second, companies by size and industry in the third stage, and nationals and their dependents in the fourth and fifth stages.

‘While Oman opened its borders for tourism amid the ongoing pandemic, the country has mandated health insurance for travel to and from Oman. These measures are likely to aid growth in the non-life segment,’ the report said.

Moreover, rising awareness of insurance products as tools to hedge against risks and increased coverage by private sector employers bode well for the segment.

The property insurance line is expected to benefit from the series of construction projects undertaken by the government as part of its economic diversification strategy, Alpen Capital report said.

‘The Oman Investment Authority has announced 13 national projects valued approximately at RO3.5bn in 2021 alone covering a number of key sectors including energy, manufacturing, mining, health and tourism services. Such developments are expected to further expand the underwriting base for non-life commercial lines,’ the report added.

Consequently, it said, the insurance penetration and density in the sultanate are expected to increase to 1.5 per cent and US$274.4, respectively, by 2026.

Oman is amongst the smallest insurance markets in the GCC and ranked 77th globally during 2020, based on gross written premiums, Alpen Capital noted.

The sultanate’s insurance sector remains oversupplied and faces stiff competition with around 20 players. The sector recorded a rise of 1.1 per cent CAGR between 2015 and 2020 to reach US$1.2bn, the report added.