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New regulations doubling the minimum capital requirement for Omani insurers to OMR10 million and mandating listing on the Muscat Securities Market (MSM) have been described as ‘credit positive’ by Moody’s ratings agency. Royal Decree 39/2014 issued in August 2014 amending Oman’s Insurance Law, provides a three-year grace period for existing providers to comply with the new rules. New market entrants must comply from the outset.

These measures, introduced by Oman’s insurance regulator, the Capital Market Authority (CMA), aim to boost the sector’s access to capital and increase transparency via the financial reporting rules in place for publicly-listed companies. Industry sources also forecast that the increased capital requirement may encourage Omani insurers to assume more underwriting risk with higher retention thereby reducing their traditional reliance on reinsurers. It may also trigger consolidation among the smaller players. Multiple insurance IPOs are likely to ensue as currently only 4 out of 22 Omani insurers (11 of which are branches of international insurance groups), are listed on the MSM.  The increase in capital market activity should boost investment opportunities for  individuals and small retail investors, a key focus area for the CMA.

Oman’s insurance sector has expanded at an average rate of 14% annually over the past 6 years and has doubled its share of GDP from 0.6% in 2007 to 1.2% in 2013 when total direct insurance premiums reached OMR360 million according to a recent report.  New segments such as engineering, construction, medical liability and property have experienced robust growth.  The introduction of mandatory insurance covers, such as health, unemployment, motor third party and liability, as well as the launch of two takaful (Islamic insurance) companies, have increased market awareness and the diversification of insurance products.

For more on Oman’s insurance law, contact Ravinder Singh