(MENAFN- Muscat Daily) Oman's small insurance sector has witnessed a restricted and slow growth but significant upside potential remains to be tapped according to the Central Bank of Oman (CBO).
Total assets of Oman's insurance sector grew by about five per cent last year which is low given the huge potential available from the relatively under-insured market the central bank said in a report released last week.
There are 22 insurance companies (including 11 foreign insurers) operating in Oman with a total asset base of RO827mn.
'The insurance sector in Oman is small but growing albeit at a slower pace. The future outlook of the sector therefore remains positive with significant growth potential. From the traditional metrics of insurance penetration and density it appears that significant space for growth is available' the report said.
Insurance penetration - the ratio of insurance premiums to gross domestic product (GDP) - was about 1.3 per cent in Oman last year. It is comparable to that of GCC countries but was much below the global average of 6.5 per cent.
Likewise insurance density which is per capita insurance premium is less than RO100 in Oman as compared with the GCC average of RO141 and the global average of RO252 per head according to the CBO.
'Both these indicators are suggestive of the potential available to cater to the unserved and underserved market segments' the CBO said.
According to the central bank insurance firms need to make concerted efforts to develop the life business in order to diversify their sources of revenues.
Oman's insurance sector is adequately capitalised with a capital-to-asset ratio of over 30 per cent. On average insurers retain about 55 per cent of the premiums while transferring the rest to re-insurers. However for motor insurance insurance companies retained about 86 per cent of premium (and consequently the risks) the report said.
The CBO noted that perilous road safety records coupled with higher retention ratios for the motor segment increase the vulnerability of insurance companies to this segment.
'Road safety in Oman appears to be improving with sequentially lower number of accidents and casualties over the past few years. After a decline in 2013 new vehicle registration picked up in 2014 with registrations crossing 140000. While more vehicles on the roads means more business to insurance companies it may also have negative repercussions for road safety' the report added.
Legal Disclaimer:
MENAFN provides the information “as is” without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the provider above.