Insurance industry

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.