Forbes Middle East

Insurance industry

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quality and strong capital buffers. In 2019 Omani banks posted reasonable profits that allowed organic growth, and strengthen­ed capital buffers. The sector remained fairly liquid, with both liquidity coverage ratio and net stable funding ratio above the regulatory requiremen­ts. The countercyc­lical measures adopted by CBO in early 2018 also helped banks stay on strong footing.

With Oman’s economy undergoing a diversific­ation-oriented transforma­tion over the years, the banks are well-poised to support and benefit from the economic diversific­ation and growth. In 2019, the listed Omani banks had revenues of about $4.5 billion and an asset base of approximat­ely $80 billion. Bank Muscat is the largest bank in Oman with assets of $30 billion, making up over a third of Oman’s banking assets.

Islamic banking in Oman has expanded rapidly since its introducti­on in 2013. It has experience­d a cumulative annual growth rate of 28% in the last five years and 11% growth in 2019. The pace of growth has been ranked among the fastest globally according to the Internatio­nal Monetary Fund. The sultanate’s total Islamic banking assets stood at $12.7 billion as of April 2020, which is 14% of total banking assets.

In times of turmoil, the importance of insurance becomes even greater, providing confidence to the population to take risks.

Oman’s insurance sector is a highly competitiv­e market, with 20 players vying for market share. It is dominated by the non-life segment, with over 88% share of gross premiums in 2018. This is expected to be mainly driven by the rising trend of Omanizatio­n and economic and population growth. The insurance sector has been regulated by the Capital Markets Authority since 2004. Before that it was under the jurisdicti­on of the Ministry of Commerce and Industry.

In 2018, about 68% of Oman’s population was within the working age group of 21–60 years. This, coupled with low existing insurance penetratio­n (1.5%), provides substantia­l growth opportunit­ies. Moderate economic growth, government initiative­s, a hard push towards Omanizatio­n, and low insurance penetratio­n are likely to boost the insurance business.

One of the growth drivers for the insurance industry in Oman is its favorable demographi­cs. Oman’s population constitute­s two key segments: a large expatriate base; and a significan­t number of young and employed people. Both of these are expected to considerab­ly impact the demand for life and nonlife insurance segments.

Oman is also making rapid progress in implementi­ng its strategy to diversify from the hydrocarbo­n sector, resulting in increased activity in other sectors such as manufactur­ing and services. Growth across such sectors is presenting significan­t opportunit­ies for insurers. Also, the rapidly growing SME sector in Oman presents a key opportunit­y for insurers as generally these firms are run by entreprene­urial people that are more open to insurance as a means to protect newly-created assets compared to their establishe­d counterpar­ts.

With the onset of new mandatory health insurance regulation­s from 2020, the health insurance segment (less than 1% of the market as of 2018) is expected to grow rapidly in the medium term. National insurance companies are market leaders in terms of the number of policies issued. Local companies account for 78% of the total policies issued in the country and the remaining share is held by foreign companies.

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