17 per cent growth in health insurance from Jan to Sept 2017
FROM P13 individual life insurance and other insurance recorded the highest ratio of decrease in the insurance companies’ retention to 19 per cent and 13 per cent consecutively.
As for the distribution of the insurance products’ share in the gross direct written premiums, the motor insurance, both comprehensive and third party, led the field from the standpoint of the volume of direct written premiums after reinsurance with a 50 per cent share, followed by health insurance with 30 per cent. This reflects the ability of insurance companies to accommodate the risks of such branches while the net share of insurance products of transport, properties, engineering and liability are still low compared to the gross direct premiums on the bases that the retention ratio of each branch doesn’t exceed 2 per cent of the gross premiums due to the cost of indemnities paid by the insurers for such branches which are very high and exceed the capital of the insurers sometimes. Hence, insurance companies turn to reinsurance companies to cover such risks which is a sound practice in the global insurance market.
CMA endeavours to enhance the financial positions of the insurance companies operating in the Sultanate to be able to reach better retention ratios and to expand their abilities to cover greater risks through increasing the minimum capital to RO 10 million and transforming the national companies into public joint stock companies.
RETENTION RATIO The retention ratio for properties, transport and engineering insurances are the lowest compared to other branches of insurance at 14 per cent, 21 per cent and 21 per cent consecutively due to reinsurance of greater part of the risk with reinsurance companies.
Retention ratio of motor insurance (comprehensive and third party) is the highest among various insurance branches at 88 per cent for third party insurance and 85 per cent for comprehensive insurance. It is noted that retention ratio of individual life insurance has recorded 68 per cent.
The amount of written premiums in the three quarters of 2017 increased by 10 per cent compared to the same period in 2016. Gross written premiums were RO 196.9 million during the three quarters of 2017 compared to RO 178.4 during the same period in 2016. Net indemnities were RO 131.12 million during the three quarters of 2017 compared to RO 124.2 million in the same period in 2016. Total commissions insurance companies have received from reinsurers for reinsurance have increased to RO 20.92 million during the three quarters of 2017 compared to RO 19.51 million during the same period in 2016. Production costs have increased by 5 per cent during the three quarters of 2017 to RO 42.12 million compared to RO 39.94 million during the same period in 2016.
LARGEST PLAYERS National Life and General Insurance is the largest player with a contribution to direct premiums in the three quarters of 2017 of RO 90 million (25 per cent) followed by Dhofar Insurance at 10 per cent and Oman United Insurance at 9 per cent, Axa Insurance at 8 per cent, and Al Madina Insurance at 6 per cent.
There were 20 insurance companies at the end of the third quarter of 2017 after the merger of Arabian and Falcon Insurance and Muscat Insurance with Muscat Life Insurance. There were 10 national insurance companies and 10 foreign companies in addition to one reinsurance company namely Oman Reinsurance. The number of brokers was 38 and the agents were 112 at the end of the third quarter of 2017.
The number of employees of the insurance sector was 2987 including 1988 Omani employees (accounting for 67 per cent of the total). The Omanisation ratio was 71 per cent and 58 per cent in insurance companies and brokers respectively, and 52 per cent for insurance agents. Insurance companies recorded 76 per cent Omanisation ratio followed by brokers at 17 per cent.