Oman: Insurance firms mulling hike in premium

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MUSCAT -- The insurance companies are mulling a hike in premiums collected from the insurers as the Royal Decree No 118/2008, amending diya (blood money) and arush (compensation for injuries) takes effect from December 1. Article 1 of the decree states that diya for the deceased is raised to RO 15,000 from the previous RO 5,000 and further stipulates that compensations for injuries shall be estimated based on the diya, and in all cases a loss of the function of a limb shall be considered as a loss of the limb. Experts in the insurance sector say, "in the wake of the potential increase in diya to be given to the heirs of the deceased in accidents, the premiums collected from the insurers is not sufficient to cover the claims".

Dr J Retnakumar, resident manager of New India Assurance Co, said, "Defenitely, there will be an increase. We'll decide only after a careful study and planning". Nevertheless, he ruled out an immediate increase in the premiums saying "we'll not increase the premiums at once. We need time to study the effects of the potential increase in the blood money. At the same time, we cannot forget the social commitment that we have towards our patrons". "The number of deaths in road accidents has increased in Oman over the last few years" says an Insurance Surveyor associated with a leading insurance company in Muscat.

"This year alone, we have received nearly 800 claims so far. Added to that, the diya money to be given is jumping from RO 5,000 to 15,000 which will force us to increase the premium further" he noted. But many of the insurance houses don't see nothing new about it."It is a known factor. As the amount of blood money to be given to the dependants of the deceased is more than that was in the past, the general insurance companies must be finding it bit difficult to maintain the same policy with a lower premium and hiking the premium amount is the only way out" some of them said.

But, Raghavan Murthy, CEO United Finance Company says that it can be a land mark in the insurance arena of Oman as more and more people will be afraid to keep their vehicles uninsured since the blood money will be as high as three times. "Many of the vehicle owners used to keep their vehicles uninsured in the past. But with the new decree, I don't think they would dare to continue so".  Besides, the compensation that is to be paid to disability of any nature has also been fixed to 15,000 whereas previously it was paid according to the certification of the doctors regarding the disability" Murthy mentioned. Asked about the possible hike in the premiums, Murthy said that they haven't received any information pertaining to the rate hike.

Meanwhile, the Directorate-General of Traffic Department statistics revealed that mortality rates on the roads has increased alarmingly at a rate of nearly 4 per cent compared to last year in spite of the constant awareness campaigns. In 2007, the number of people died in road tragedies was 798, whereas, till yesterday, the number of the same has shot up to 817. And the main reason for traffic accidents, according to the directorate spokesperson, are: speed, reckless driving, careless overtaking and tailgating. The directorate stated that most of the accidents are due to the carelessness of the drivers. "Accidents are not happening, it is man-made".

By Staff Reporter

© Oman Daily Observer 2008