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Oman insurance
market update
2020-2021
Prepared by
Howden Analytics
Contents
Executive summary 5
Macro-economic overview 9
Insurance market 13
Pricing trends and drivers 21
Contacts 31
Executive
summary
The COVID-19 pandemic had a significant impact
on the worldwide economy, and affected the
individuals, societies and businesses in Oman.
Despite the challenges presented by the
pandemic, the well-managed response during
2020 has been reflected in the continued recovery
of the economy. Oman is returning to its upward
trajectory to achieve the goals outlined by the
Oman Vision 2040 initiative.
Oman insurance market update 2020-2021 5
The non-life insurance sector has
contributed 1.7% to GDP in Oman in 2020 1 .
3.2% decrease in gross direct written non-life insurance
premiums from 2019 to 2020 (USD 1.07 billion and USD 1.1 billion
respectively) 1 .
Health insurance still represents the largest share in gross
written premium of insurance companies, followed by motor
insurance with a share of 33% and 24% of the total premium,
respectively. National Life & General Insurance Company
dominated 34% of the total market share in 2020, followed by
Dhofar Insurance Company and Al Madina Insurance Company
with 10% and 9% of the market share, respectively.
Figure 1. 2020 Oman non-life insurance sector by segment
Source: CMA, Company annual reports, Howden Analytics, NOVA
$0.16bn
$1.07bn
$0.91bn
$0.70bn
(Top 5)
$0.22bn
(Others)
Non life insurance sector
of which are Foreign
insurers
of which are National
insurers
Top 5 insurer split
1. Capital Markets Association (CMA).
6 Oman insurance market update 2020-2021
Figure 2. 2020-2021 average rate change for Oman insurance
Source: Howden, Howden Analytics, Nova
25
20
15
10
25%
5
0
3%
For free of loss accounts
For accounts with loss experience
Note: Average rate change is calculated using a straight average across all lines of business.
The market has shifted to respond
to increased price sensitivity and
more cautious risk assessment
criteria, resulting in the withdrawal
of international capacity, and the
local listed insurers moving to fill
the space.
Pricing increased by an average of 3% for free of
loss accounts across all lines of business. The
hardening of rates for Financial Lines and Property
insurance have been counterbalanced by a
reduction in rates for Marine, Motor and Employee
Benefits insurance, resulting in a relatively stable
average rate change for free of loss accounts.
The hardening of rates for accounts with claims
experience to an average of 25% was underpinned
by the large rate increases for Financial Lines and
Property insurance during the last year.
Oman insurance market update 2020-2021 7
Macro-economic
overview
There has been an increase in trade rerouted
through Oman prior to 2020, which strengthened
and solidified Oman’s strategic position in the
global economy. Given Oman’s rich natural
resources and appealing geography, the
sultanate’s GDP was heavily reliant on exports
from its hydrocarbon sector.
Oman insurance market update 2020-2021 9
When the COVID-19 pandemic shocked the
worldwide economies in 2020, Oman’s overall
growth slowed and retreated following the
government-enforced restrictions on movement to
halt the spread of the virus 2,3 . The economy was hit
by a sharp decline in demand for natural resources
during the pandemic. The fall in global trade and
consumption was reflected in the large economic
contraction of the hydrocarbon sector in Oman 4 .
Alongside other targets, the initiative aims to
reinforce and leverage Oman’s active contribution
to international trade. There has been a movement
towards the development of the non-hydrocarbon
sector by diversifying the country’s main source
of income away from an over-reliance on the
hydrocarbon sector. The initiative aims to increase
Oman’s non-oil sector’s share of total GDP from
65% in 2019, to 90% in 2040 5 .
The timely response to the pandemic and the
successful vaccine roll-out has enabled the
continued lifting of restrictions, allowing the return
of economic activity. The removal of government
imposed measures is expected to trigger a healthy
recovery of the economy in Oman as it is expected
to recover by 2.3% in 2021 and 3.2% in 2022 2
(Figure 3).
Oman has outlined its long-term economic strategic
goals in its ‘Vision 2040’ initiative 5 . The movement
aims to build a productive and diversified economy
in order to leverage Oman’s competitive advantage.
The ‘targets’ of Vision 2040 aim to reinforce and
advance Oman’s economic and environmental
global position.
Diversification has been identified as a key factor
in sustainable economic growth in sectors such
as agriculture, mining, manufacturing, transport,
logistics, e-commerce, education and tourism.
There has been a significant movement towards
improving and expanding Oman’s infrastructure
and heavy construction projects which has
underpinned the increasing growth in the non-oil
sector of the economy. Oman has invested in its
roads, airports, seaports and logistics facilities
to enhance worldwide networks, capabilities
and productivity 3,5 .
The strategic initiatives, diversification
and trajectory of Oman reflects the
sultanate’s resilience as it paves the
way for sustainable economic growth
in the coming years.
2. Bloomberg.
3. Capital Markets Association.
4. Oxford Business Group.
5. Implementation Support and Follow-up Unit (ISFU).
10 Oman insurance market update 2020-2021
Figure 3. Gross domestic product forecasts
for selected G20 countries, UAE and Oman
Source: World Bank, Bloomberg
120
110
GDP index
100
90
2015 2016 2017 2018 2019 2020 2021F 2022F 2023F
France
Italy
UAE
Oman
Germany
Spain
UK
Oman insurance market update 2020-2021 11
Insurance
market
The Oman insurance sector is concentrated
primarily in national insurers, making up to 85% of
gross written premium in 2020. National Life and
General Insurance Company accounts for a third
of the sector’s premiums.
Health insurance accounts for a third of the nonlife
sector, which will continue to grow following the
introduction of mandatory cover.
Annual net loss ratios have reduced in 2020, driven
by national insurers due to reduced economic and
claims activity.
Oman insurance market update 2020-2021 13
Regulation
The Capital Markets Authority (CMA) supervises
and regulates insurance companies, agents and
brokers in Oman. The CMA works to facilitate
efficiency and transparency in insurance
transactions by enforcing rules, regulation and
sanction breaches.
Transformation
The Oman insurance sector is slowly adopting
the use of technology to offer insurance products
and services. Most players are leveraging
communication platforms and social media to
connect with clients for marketing and/or claims
settlements 6 . The Oman vision 2040 steps are
positioned towards digital transformation towards
a tech-smart government.
6. Glasgow Consulting Group.
14 Oman insurance market update 2020-2021
Figure 4. Gross written premium and average
premium per policy for general insurance
Source: Capital Markets Authority
National insurance companies
Foreign insurance companies
960
680
158
1500
940
920
900
5%
670
660
650
640
630
156
154
152
150
54%
1000
500
880
2019 2020
620
148
2019
2020
0
GWP (USD) Millions
Premium per policy (USD)
GWP (USD) Millions
Premium per policy (USD)
Total gross written premiums have
decreased by 4% for national insurance
companies to USD 914m, while premiums
for foreign insurance companies increased
by 3% from USD 152m to USD 157m.
The average premium per policy has increased from
USD 704m to USD 1,081m (Figure 4). Premiums written
for national insurance companies have decreased
by 4% since 2019, although average premium per
policy has increased to USD 670m from USD 640m
in 2019. Considering the premium change and the
average premium per policy together, rates appear
to have increased for both national and foreign
insurance companies during the last year.
Oman insurance market update 2020-2021 15
Figure 5. Line of business split of gross
written premium in 2019 and 2020
Source: Capital Markets Authority
USD
1.10bn
2019
35% Health
27% Motor
13% Life
12% Property
5% Engineering
4% Other
3% Transport
2% Liability
USD
1.07bn
2020
33% Health
24% Motor
15% Property
12% Life
5% Engineering
5% Other
3% Transport
3% Liability
16 Oman insurance market update 2020-2021
Motor and Health insurance dominate the
Oman insurance market with a combined
share with 58% of premiums in 2020. This
percentage has lowered since 2019 as
insurers increase property premiums due
to increased natural catastrophe activity
(Figure 5).
The non-life insurance segment accounted for over
88% of total insurance premiums written in 2020 7 .
The growth of GWP in recent years has been largely
driven by an increase in Health insurance from an
18% market share in 2013 to a share of 33% in 2020 8 .
This can be attributed to the introduction of the
Unified Health Insurance Policy (UHIP) which made
Health insurance mandatory for all private sector
employees in March 2019. The Health insurance
sector is expected to grow as the government
continues to roll out UHIP for all expatriate and local
workers employed in the private sector.
Property insurance represents the largest growth
with a 3ppts increase, now making up 15% of the
general insurance market. This is due to an increase
in the frequency and severity of natural catastrophic
events in Oman. This includes the Mekunu Cyclone
which caused devastation in 2018 resulted in
insurance companies receiving claims amounting to
USD 390 million 9 . The reinforced public awareness
following similar catastrophes has led to an active
movement towards investing in Property insurance
protection.
Due to the fragmented nature of the Oman
insurance sector, it is highly competitive with 20
players contending for market share. It is dominated
by the non-life segment with over 88% of GPW in
2020 8 . This is expected to be driven by economic
and population growth, in addition to the rising
trend of ‘Omanization’. Omanization aims to create
employment opportunities for its citizens in the
private sector to reinforce its local economy, which
has been hit by the pandemic and low oil prices.
Oman’s 2040 Vision is striving to see 40% of the
jobs available in the private sector to be occupied
by Omanis 10 . Within the insurance sector, 79% of
the workforce were Omani nationals in 2020, with
the ratio set to increase in the coming years 8 .
7. Alpen.
8. Capital Markets Authority (CMA).
9. Oman Times.
10. Implementation Support and Follow-up Unit (ISFU).
Oman insurance market update 2020-2021 17
Figure 6. Net loss ratio for national and
foreign insurance companies in 2019 and 2020
Source: Capital Markets Authority
64%
60%
53%
52%
National insurance companies
Foreign insurance companies
2019 2020
The loss ratio of national and foreign
insurance companies decreased by
4ppts and 1ppt respectively (Figure 6).
The overall decrease in loss ratios across
all companies can be attributed to the
effects of the pandemic which suppressed
movement and therefore reduced the
claims incurred by companies.
Despite the weaker economic conditions as a
result of the pandemic which led to a decline in
GWP by 4%-5% in 2020, the market has reported
an improvement in profitability in 2020, compared
to 2019. The suppression of business activity and
imposed lockdowns has led to fewer claims which
has supported profitability in the industry.
18 Oman insurance market update 2020-2021
Figure 7. The percentage share of total gross written premium
of the top 5 local listed insurance companies in 2020
Source: Company Annual Reports 2020
USD
0.7bn
34% National Life and General Insurance Company
10% Dhofar Insurance Company
9% Al Madina Insurance Company
6% Oman Qatar Insurance Company
6% Oman United Insurance Company
The top 5 insurers account for 65% of the
total non-life insurance market, of which
34% represents National Life & General
Insurance Company (Figure 7).
Despite the competition among the large
number of insurance suppliers incentivising
towards consolidation, there has been a lack of
M&A activity in the Omani insurance market 11 .
Foreign ownership of Omani joint listed insurance
companies is permitted up to a maximum of 70% of
the total shareholding.
11. Oxford Business Group.
Oman insurance market update 2020-2021 19
Pricing trends
and drivers
Rates have remained relatively stable
during the last year across most
accounts, with exceptions for Financial
Lines and Property insurance which
have experienced more pronounced
rate hardening during the last year.
Note: Reported pricing changes are calculated using averages from a wide range of clients in
terms of size, industry, location, claims history and other parameters. Many clients experienced
pricing changes that deviated above and below the average.
Oman insurance market update 2020-2021 21
Figure 8. 2020-2021 average rate change by line of business
Source: Howden, Howden Analytics, Nova
80%
60%
40%
20%
0%
-20%
-40%
For free of loss accounts
For accounts with loss experience
Marine
Employee Benefits
Motor Fleet
Casualty
Engineering
Property
Financial Lines
22 Oman insurance market update 2020-2021
Casualty
Personal Accident | Professional Indemnity | Public Liability | Comprehensive General Liability
7.5% av. rate increase
across all Casualty
accounts
0-5% average increase for free of loss accounts
5-10% average increase for accounts with loss
experience
Key drivers of rate change
∙∙
Changes to market capacity
∙∙
Loss experience
∙∙
Competition
∙∙
Cost of reinsurance
Insurer overall appetite
Comprehensive General Liability – Cautious
Professional Indemnity – Cautious
Public Liability – Stable
Personal Accident – Stable
Overall coverage terms
Have become stable favourable for Liability
insurance. Coverage terms have not majorly
changed for all other Casualty lines.
Casualty rates remained relatively stable during 2020
due to the lack of significant losses, and therefore
there was no requirement to increase pricing.
Furthermore, local listed insurers have substantial
capacity for Casualty insurance and are able to offer
lower rates to retain renewals in the competitive
market, which has also stabilised rates. Rates are
expected to remain consistent into next year.
24 Oman insurance market update 2020-2021
Employee Benefits
Group Medical | Group Life | Workmen’s Compensation
7.5% average rate increase
across all Employee
Benefits accounts
Key drivers of rate change
∙∙
Loss experience
∙∙
Competition
5-10% average decrease for free of loss accounts
5-10% average increase for accounts with
loss experience
Insurer overall appetite
Group Medical – Stable
Group Life – Stable
Workmen’s Compensation – Stable
Overall coverage terms
Terms have become more favourable
towards clients for Group Medical insurance
and Group Life insurance. There has been
no change in coverage terms for Workmen’s
compensation insurance.
The moderate 5-10% average increase in rate is
consistent across all sub-lines of Employee Benefits
(EB) insurance. In particular, the premium rates for
Workmen’s Compensation insurance have decreased
over the last few years due to severe competition
and minimal loss experience. Insurers have also
started offering several additional extensions
without charging more premium. Renewal rates for
EB insurance typically reflect the loss experience
on the accounts.
There is a lack of international capacity for EB in
Oman, however due to the large number of local
carriers, there is sufficient capacity to place EB
insurance in the local market.
The introduction of mandatory health insurance
coverage for the private sector offers a
considerable boost to Oman’s EB insurance, in
addition to standardising the health benefits
available in Oman.
Oman insurance market update 2020-2021 25
Engineering
Contractors All Risks (CAR) | Contractors Plant & Machinery | Erection All Risks (EAR)
12% average rate increase
across all Engineering
accounts
10% average increase for free of loss accounts
10-15% average increase for accounts with
loss experience
Key drivers
of rate change
∙∙
Changes to market appetite/capacity
∙∙
Loss experience
∙∙
Cost of reinsurance
Insurer
overall appetite
CAR – Cautious
Contractors Plant and Machinery – Stable
EAR – Cautious
Overall coverage
terms
Terms have become less favourable towards
clients for CAR and EAR, while there has
been no change in terms for Contractors
Plant and Machinery.
Changes to capacity and appetite, unfavourable
loss experience and cost of reinsurance have
inflated rates for Engineering lines to a 12% average
increase across all accounts. The individual nature
of the risk insured is reflected in the rate change for
accounts with loss experience. Insurance pricing for
the Engineering industry is also influenced by high
interest rates and inflation.
Overall client retention has remained stable
while limits placed have increased for all lines
of Engineering insurance. Coverage terms have
changed due to restrictive covers and clauses, sublimited
extensions and an increase in deductibles.
26 Oman insurance market update 2020-2021
Financial Lines
Banker Blanket Bond (BBB) | Cyber | Cyber Security & Privacy Protection Insurance | D&O Liability
50% average rate increase
across all Financial Lines
accounts
25% average increase for free of loss accounts
50-100% average increase for accounts with
loss
Key drivers
of rate change
∙∙
Changes to market appetite/capacity
∙∙
Loss experience
∙∙
Macro factors
∙∙
Shifting views of risk
Insurer
overall appetite
D&O Liability – Cautious
Professional Indemnity – Cautious
Cyber – Cautious
BBB - Cautious
Overall coverage
terms
Terms have become less favourable to
clients across all lines of business.
All sub-lines of Financial Lines have experienced
hardened rates across all accounts, with rates
increasing by 100% for some lines depending on
loss experience and several macro factors.
Cyber is a relatively new product in Oman, therefore
high rates represent the lack of experience and low
level of risk mitigation strategies in place. Pricing
pressure is reinforced by several significantly
large losses in the Middle East which is cautioning
insurers and increasing prices.
There is a lack of capacity for Financial Lines
insurance in Oman, specifically there is no local
market capacity, therefore the market is heavily
dependent on the (re)insurers in the London and
international markets. The increase in pricing was
further reinforced by the effects of the pandemic
on the tourism and service industries.
Oman insurance market update 2020-2021 27
Marine
Marine | Marine Stock Throughput | Open Marine Shipments
25% average rate
reduction across all
Marine accounts
25% average decrease for free of loss
accounts
Key drivers
of rate change
∙∙
Changes to market capacity
Insurer
overall appetite
Marine – Cautious - Stable
Marine Stock Throughput – Stable
Expansive- Stable
Open marine shipments insurance – Stable
Overall coverage
terms
Terms have become more favourable
to clients across all sub-lines of Marine
insurance.
The Marine market in Oman is largely in line
with that of the UAE. The lower level of Marine
losses was underpinned by the suppression of
movement and trade as a result of the pandemic.
Furthermore, despite the reduction in capacity
from Lloyd’s of London syndicates for Marine,
there is high competition and capacity amongst
insurance companies for Marine insurance. The
lower loss ratios, coupled with the changes in
market capacity has placed downward pressure
on rates for Marine insurance.
28 Oman insurance market update 2020-2021
Motor Fleet
Motor Commercial Comprehensive | Motor Commercial Third Party
Zero average rate change
across all Motor Fleet
accounts
5-10% average reduction for free of loss
accounts
10% average increase for accounts with loss
experience
Key drivers
of rate change
∙∙
Competition
∙∙
Loss ratio
Insurer
overall appetite
Motor Commercial Comprehensive – Stable
Motor Commercial Third Party – Stable
Overall coverage
terms
Terms have become more favourable to
clients for Motor Commercial Comprehensive
Insurance and favourable to clients for Motor
Commercial Third Party insurance.
On average, Motor Fleet insurance experienced no
change in rates across all accounts during the last
year. Again, following the reduction of movement
as a result of government-enforced lockdowns in
response to the pandemic, there were far fewer
losses than in prior years. Therefore rates reflect the
favourable loss experience and the high competition
and capacity for Motor insurance in Oman.
Oman insurance market update 2020-2021 29
Property
Property All Risks (PAR) | Business Secure | Machinery Breakdown | Electronic Equipment
30% average rate increase
across all Property
accounts
20% average increase for free of loss accounts
40% average increase for accounts with loss
experience
Key drivers
of rate change
∙∙
Changes to market appetite/capacity
∙∙
Loss experience
∙∙
Geopolitical situations in the region
∙∙
Climatic changes and trends
Insurer
overall appetite
PAR – Cautious
Business Secure – Cautious
Machinery Breakdown – Cautious
Electronic Equipment – Cautious
Overall coverage
terms
Terms have become less favourable to
clients across all lines of business.
All Property lines of business have experienced
the same rate hardening. Pricing reflects the
hardening of reinsurance markets both locally and
internationally. Local insurers continued to struggle
to gain support from reinsurers who are abstaining
from Oman due to the frequency and severity of
natural catastrophe losses. For example, Cyclone
Shaheen caused widespread devastation and
significant losses during October 2020. Events
such as Cyclone Shaheen have further aggravated
the situation and restricted the capacity further for
Property insurance.
30 Oman insurance market update 2020-2021
Contacts
Atinc Yilmaz
Regional CEO Turkey, The Middle East and Africa
Atinc.Yilmaz@howdengroup.com
Rajiv Arora
CEO Howden Oman
Rajiv.Arora@howdenoman.com
Guru Arunachalam
Key Account Manager
A.Guruprasad@howdenoman.com
Michelle To
Head of Business Intelligence, Howden Analytics
M.To@howdengroup.com
Lauren Powell
Business Intelligence, Howden Analytics
Lauren.Powell@howdengroup.com
Oman insurance market update 2020-2021 31
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T +44 (0)20 7623 3806
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