Dr Saeed Mohammed Ahmed al Saqri, Chairman of the Board of Directors of the Financial Services Authority approved the regulation for co-insurance in the health insurance under the Insurance Companies Law promulgated by Royal Decree No. 12/79. The regulation aims to put in place a groundwork to increase retention ratios of insurance premiums inside the Sultanate of Oman and reduce the need for reinsurance abroad by allowing insurance companies who have not obtained licenses to carry out health insurance to obtain licenses for co-insurance to benefit from the health insurance product to act as a reinsurer for such product to enhance increasing the retention for health insurance premiums inside the Sultanate of Oman.
The regulation was issued after consideration of the recommendations of an actuary study on the prices of health insurance prepared in collaboration with an international consultancy firm. The FSA aims from the move to create companies specialized in health insurance to provide the best services to the customers as many companies (local and foreign) are currently carrying out reinsurance of health insurance policies with specific reinsurers outside the Sultanate of Oman to avoid incurring huge losses expected from such type of insurance.
However, this reduces the retention ratios inside the Sultanate of Oman in addition this deprives the national economy of circulation of funds in the country. The retention ratio in health insurance was 79 percent in 2023.
The company that obtains a license in co-insurance in health insurance will not be allowed to sell health insurance policies but will be allowed to participate with the companies that obtain health insurance licenses in bearing part of insurance risks of such policies and hence pay financial consideration for the companies with which the co-insure which is the principle of co-insurance.
To ensure sound implementation of such a system among insurance companies, FSA prepared a regulation for licensing health insurance co-insurance comprising several clauses focusing on work mechanisms, limits of co-insurance of the risks of health insurance among the insurance companies, the obligations related to the issuance of co-insurance policies as well as the terms and conditions for administration of the policy and the administrative penalties for the violations regarding licensing directives of co-insurance in health insurance.
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