Efforts to establish the first Natural Catastrophe (Nat-Cat) Insurance Pool, aimed at providing coverage against the rising frequency of destructive adverse weather events and natural disasters witnessed in Oman, are gaining steam, according to a key company spearheading the initiative.
Oman Reinsurance Company (Oman Re), the nation’s first and only reinsurer, said a Steering Committee set up to oversee the delivery of the Nat-Cat project continues to make headway in its mission to design a framework for the consideration and approval of the sector’s regulator, the Capital Market Authority (CMA).
Nat-Cat Insurance Pools are increasingly becoming an imperative in countries that are prone to all kinds of natural disasters, such as earthquakes, hurricanes, cyclones, flash flooding, volcano eruptions and so on.
For the Sultanate of Oman, the primary risk in this category stems from cyclones, severe flooding from adverse weather events, and even pandemics of the kind that swept across the global in 2020. Notable is the example of Cyclone Shaheen, which devastated northern parts of Oman in October 2021, causing infrastructure and property damage estimated in the region of around RO 60 million, besides claiming a number of lives as well.
According to Oman Re, a Steering Committee made up of representatives of six local insurance firms is presently working on the various technical aspects of the reinsurance pool’s formation. Oman Re has been named as the Nat Cat Pool Manager in recognition of its role in initiating the effort, it said.
Giving an update on the planned deployment of the National Nat-Cat Insurance Pool for Oman, Oman Re Chairman Dr Juma bin Ali al Juma stated: “The Steering Committee completed their assessment of the Motor Nat Cat Pool section and shared their proposal with the Capital Market Authority for formal approval and necessary insurance law amendments. With regards to the Non-Marine Nat Cat pool, the Steering Committee completed the data collection and modeling. At this point in time, the Steering Committee is working on various pricing option of the cover with international reinsurance market,” he added in the Chairman’s Report for fiscal 2022.
An uptick in natural disasters in the wider Middle East region has also prompted the General Arab Insurance Federation (GAIF) to call for the creation of a regional Nat-Cat insurance pool to help strengthen the industry’s underwriting capacity at the regional level.
According to Swiss Re, one of the world’s largest reinsurers, natural catastrophes caused a total of $115 billion of insured losses around the world in 2022, with economic losses totaling an estimated $268 billion. Increased financial losses are on par with trends from the past decade, and as losses driven by extreme weather continue to grow in numbers, so too does the need for insurance, it has pointed out.
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