Like any business, insurance and reinsurance are practiced in a world of change. The last few years have witnessed unprecedented changes in the types of risks that the insurance industry is called upon to handle, in the organization of insurance and reinsurance markets, and in the economic, social and political environments in which Insurers and Reinsurers have to operate. Such changes present new challenges and opportunities to insurance industries, and not least to reinsurers.
The ability to understand the implications of change and to respond to them depends upon a sound knowledge of the principles that lie behind practice. It must not be thought that an understanding of the principles will provide clean-cut answer to practical issues.
The world’s financial markets have experienced unprecedented volatility, financial institutions and indeed countries in the world over have been impacted. Past performance is not necessary a guide to future performance. What may have been manageable before was clearly not manageable now!
The Capital Market Authority (CMA) of the Sultanate of Oman continues issuing insurance market reports on annual basis, proceeding from the awareness of the importance of modern statistical data and comprehensiveness in the decision-making sound and rational policy – making. The Insurance Market Index for 2021-2022 editions 2023 was published recently
Insurance contribution to GDP
Oman’s total population now exceeds 5 million inhabitants with a significant increase in the total assets value. The Insurance industry’s contribution to the Omani Gross Domestic Product (GDP) in 2022 was 1.23 per cent, compared with 1.45 per cent in 2021 and 1.87 per cent in 2020.
Insurance & Reinsurance is becoming a “National Security Industry”.
The earnings of insurance companies in Oman and GCC are dependent to a large extent on the reinsurance commission and direct insurance receive as a significant portion of the business is not retained i.e. fronting insurance transactions and proportional reinsurance treaties. A very high proportion of the premium is ceded to the foreign reinsurer abroad in the most cases (business out flow) to the foreign companies in the foreign countries. This is a big challenge. This is illustrated and described in insurance market index published by the CMA edition 2023.
A- Gross Written Premium, Premium Retention & Claims Paid.
I. Oman Market Gross written premium (GWP) in the year 2022 was RO 541.326 million compared to RO 479,857million in the year 2021. (Increase by 12.8 per cent). GWP in the year 2020 was RO 465.895 million. Compared with amount RO 486.582 million in the year 2019 (Decreased by 4.3 per cent).
II. Premium retention ratio of insurance companies in the year 2022 was 55.7 per cent of GWP, compared with 55.5 per cent in the year 2021. In year 2020 premium retention ratio was 56.52 per cent of GWP
III. Total claims amount paid by Insurance Companies in the year 2022 was RO 317.035 million. Ratio to GWP as 59 per cent. Compared to the amount paid RO 289.834 million in the year 2021 (Increased by 9.4 per cent). Ratio to GWP was 60 per cent and 62 per cent in year 2020
Health & Motor Insurance class of business is continuing dominating the market insurance index.
B- Health Insurance
I. Last year 2022 Health Insurance GWP amount RO 191.517 million. Ratio to the GWP was 35 per cent.In the year 2021 Health Insurance GWP amount RO 163.866 million. Ratio to the GWP was 34 per cent and in the year 2020 GWP amount RO 155.193 million. Ratio to the GWP was 33 per cent.
II. Health Insurance class of business market retained premium in the year 2022 was 79 per cent of GWP; in the year 2021 was 76 per cent in the year 2020 was 74 per cent.
III. Health Insurance Claims paid in the year 2022 amount RO 146.538 million. Ratio to the GWP was 76.5 per cent. In the year 2021 claims paid amount RO 120,123. Ratio to the GWP was 73.3 per cent and in the year 2020 claims amount paid RO 120.749 million. Ratio to the GWP was 77.8 per cent
B- Motor Insurance
I. Last year 2022 Motor Insurance GWP amount RO 106.543 million. Ratio to the GWP was 19.7 per cent. In the year 2021 GWP amount RO 102.598 million. Ratio to the GWP 21.4 per cent. In the year 2020 GWP amount RO 113.364 million. Ratio to GWP was 24.3 per cent
II. Motor Insurance class of business market retained premium ratio to the GWP in the year 2022 was 90.66 per cent compared to 91.2 per cent in the year 2021 and 90.1 per cent in the year 2020.
III. Motor Insurance class of business Gross claims amount paid in the year 2022 was RO 82.649 million (Ratio to GWP was 77.6 per cent). Compared to year 2021 was RO 78.150 million. Ratio to GWP was 76.2 per cent and compared to year 2020 was RO 67.728 million. Ratio to GWP 59.7 per cent.
(To be continued...)
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