Oman’s insurance market to hit $1.8bln by 2028

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Muscat: Oman’s insurance industry is projected to grow at an annualized rate of 4.5% to reach $1.8 billion in 2028, up from around $1.4 billion in 2022, according to leading investment banking advisory firm Alpen Capital. The Dubai-based firm said in its newly published ‘GCC Insurance Industry Report’ that a number of macroeconomic trends are expected to fuel this growth, notably GDP growth (averaging a CAGR of 3.1%), and population growth (averaging a CAGR of 3.2%) between 2023 and 2028.

Based on Gross Written Premiums (GWP), Oman’s insurance industry remains the smallest in the GCC region, and was ranked 76th globally in 2022. Nonetheless, the Omani market continues to register steady, if modest, growth, it noted.

“Oman's insurance industry grew at a CAGR of 3.7% between 2017 and 2022, reaching $1.4 billion. The growth was driven by rising population, economic expansion, infrastructure development and the implementation of mandatory health insurance” Alpen Capital stated. Outlining a segment-wise overview of the insurance market, the report noted that the health insurance segment accounted for 35.4% of the GWP in 2022, while motor insurance, including comprehensive and third-party insurance, accounted for 19.7% of the total value of premiums.

A combination of factors contributed to this uptrend, the report said. “Oman’s economic diversification plans, key regulatory enforcements and rising awareness about insurance products supported growth in the sector. However, the oil dependence of the economy, price competition that limits product innovation, and exposure to global financial volatility have hindered growth in the country,” it pointed out.

Significantly, the non-life insurance segment accounted for 87.6% of the total insurance GWP, growing at a CAGR of 4.0% to reach $1.2 billion between 2017 and 2022, according to Alpen Capital. Driving this growth was the introduction of Oman's mandatory national health insurance programme for tourists and the private sector, as well as the implementation of the Dhamani electronic platform in 2023 for sound transactions among insurance parties and improving quality of health insurance.

Leading the insurance segments is Health Insurance with a 35.4% share of GWP in 2022. Gross Written Premiums generated by this segment grew at a CAGR of 4.7% from $0.4 billion in 2017 to $0.5 billion in 2022. “This growth was driven by the phased implementation of mandatory health insurance covering over 5 million people including private sector employees, expatriates and foreign visitors,” it noted.

In contrast, motor insurance – long the dominant segment - recorded a decline in market share despite the mandatory third-party policy for automobiles. However, it still remains the second-largest segment with a 22.5% share of the GWP in the non-life segment in 2022.

Property insurance grew from 10.2% in 2017 to 19.0% in 2022, spurred by growing awareness about the need for insurance coverage in the wake of significance damage wrought by natural disasters in recent years. The life insurance segment, on the other hand, accounted for 12.4% of GWP in 2022, and grew at a CAGR of 1.9% since 2017 to reach $0.18 billion.

Importantly, the growth of infrastructure projects envisioned for implementation under the government’s Public-Private Partnership (PPP) programe is also expected to expand the underwriting base for non-life commercial lines, says Alpen Capital.

Commenting on the growth outlook, the report added: “In 2024, the country aims to progress the implementation of 11 major projects and initiatives such as the development and maintenance of 42 schools, diagnostic centers, drug treatment and rehabilitation centers in Suhar. Over the medium to long term, consumer awareness and economic diversification strategies will encourage demand for a wider range of insurance products.”