Brief about the sector
In 2004 the responsibilities of the insurance sector was transferred from the Ministry of Commerce and Industry to the Capital Market Authority in order to develop, and restructure the legislative and regulatory of this sector.
The Authority continued since then, the development path of the insurance sector and activating its role in serving the national economy of the country.
The Authority has issued several circulars, charters, laws and regulations in order to ensure keep up with the most important frameworks and legislation governing the insurance industry with global best practices and taking into account the requirements and specificities of the local market.
1. Establishment of the first Omani company for re- insurance
In 2009 the “Oman reinsurance” was established as the first Omani company engaged in reinsurance. The establishment of the company was to provide reinsurance services in the Sultanate beside to direct insurance services on one hand, and with the aim of increasing the proportion of insurance premiums retained in the local economy and reduce the leakage of these premiums to the outside in the event of re-insurance companies have re- foreign on the other.
2. Takaful insurance
Based on the Royal instructions to permit the Islamic financial institutions operate in the Sultanate and the accompanying financial instruments supports the operations of Islamic banking and finance, the Authority in cooperation with international experts prepared a draft law of Takaful insurance and its application mechanism in the Sultanate. The draft law was discussed with the Board of Directors, which in turn sent the Takaful project to the Council of Ministers for consideration and approval to begin work in the insurance market of Oman. The Authority also granted preliminary approval for the establishment of two Takaful insurance companies in the Sultanate.
3. Tackling the rising insurance rates of commercial vehicles (taxis, rental and driving school cars and gas distribution and water tankers)
In order to address the issue of rising prices of insuring some categories of vehicles, which directly affect the source of income for several categories of citizens who rely on their vehicles for income, and in order to enhance competitiveness in the insurance of these categories of vehicles as well as the development of the services levels of claims’ management provided to them, the Authority has issued Circular No. 6/2012 , which obligating insurance companies to provide insurance for all of these categories of vehicles and include a certain percentage of these insured vehicles (mandatory and third party) in its portfolio. The insurance companies started providing insurance for these vehicles since the issuance of Circular 6/2012 compared to the previous period, which was limited to only two companies. This circular contributed in reducing the cost of insurance of these vehicles as well as enhancing the competitiveness of the market in providing insurance service for these categories of vehicles.
4. Amendments to some provisions of the unified vehicle insurance policy
The capital market Authority has amended some provisions of the unified vehicle insurance in order to raise the level of controls and provisions governing the limits of the relationship between the insurer and the insured, it has determined discount rates payable on the premium at the conclusion and renewal of the insurance policies, and raise the maximum of compensation incurred by insurers for physical damage to the third party up to RO 150000 for any claim or total claims in one accident. The decision was issued in order to unify the foundations of calculating discount rates for insurance companies.
5. Insurance brokers’ regulation
The Authority prepared the regulation for insurance brokers, and after reviewing the rules regulating their work in the Sultanate, the regulations was issued under Resolution No.E / 53/2013 on 18th June 2013.
6. Prices of replacement parts and vehicles’ repairing service
Due to the problems and obstacles facing the insurance companies in dealing with vehicles agencies in relation to the rising price of parts and labour costs, the Authority has held several meetings with the Public Authority for Consumer Protection, insurance companies and agencies selling vehicles in order to reach a solutions to end the problem which may have a negative impact on the insurance rates. It was agreed that the insurance companies furnish the Authority with some data on spare parts and price differences from agencies selling vehicles and spare parts in the Sultanate , in addition to work on the formation of a committee under the chairmanship of the Public Authority for Consumer Protection to develop specifications about the classification of vehicle repair workshops, and with the membership of the Authority and the Omani Insurance Society, The Chamber of Commerce and industry of Oman representing the agencies and the Royal Oman Police and any other hand .
7. The Authority’s efforts to protect policyholders
The Authority through the department of policyholders’ protection receives complaints from policyholders against insurance companies and brokers operating in the Sultanate, and then study and analyse these complaints. The concerned department receives the complaint of the policyholder and study and analyse it technically and legally to determine its type and after coordination, supervision and follow-up with the related parties and try to resolve the complaint amicably if not the complaints shall be referred to the judiciary to decide as the Authority do not consider complaints pending before the court , or those that have already receives a judgment order, or had previously submitted to the Authority and was related to the same parties, reasons and subject.
The Authority represented by the Department has follow up the electronic link between the insurance companies and the Royal Oman Police , as this project well provide a quantum leap in the field of vehicle insurance because of the services to be provided particularly by providing an accurate database about the traffic biography of owners of vehicles and the vehicles, which will benefit the owners with good and free of accidents biography in the form of reducing the premium of the insurance which will ensure the achievement of fairness in determining insurance premiums .
8. Development of national cadres working in the sector
Seven staff members have achieved the Associateship of the Chartered Insurance Institute, which is known as (ACII). The staff members were among the students studying in the training program held in the Authority in cooperation with the Bahrain Institute of Banking and Finance. Additionally two employees were sent to the United States to get a master's degree in actuarial science.
9. IPO of the first Takaful insurance company in the Sultanate
The Capital Market Authority has adopted in October 21, 2013 the prospectus of the first Takaful insurance in Oman, which is Al Madina through the IPO, with a paid up capital of OR16.67 million divided into 166,670 shares, and offered approximately 66.67 million shares for public subscription, by 140 Bzs per share.
It’s worth mentioning that the management of the Capital Market Authority has shown in a number of occasions general tendency towards the basic requirements for licensing and regulating Takaful insurance products within the Sultanate, which is represented in the company's capital not least than OR 10 million and it’s a public company. Additionally working on providing the technical and professional staff in the field of Takaful insurance and the formation of a legitimate organization working to ensure the safety of transactions of the company from any sharia prohibitions which is one of the basic requirements for the conduct of the work of Takaful insurance. As the Authority explained that the adopted approach regarding the dependency of Takaful insurance products depends on the model based on the independence of the Takaful company or a subsidiary company to a commercial insurance company, so that it will not license Takaful insurance; this to enhance the confidence of clients with these products and ensure their safety in market concerning sharia prohibitions.
10. Electronic link between Insurance Companies and ROP
Based on the instructions of HM Sultan Qaboos bin Said that all segments of the community shall take their responsibilities and work together to reduce traffic accidents which cause loss of human lives and have adverse economic impact, and within the cooperation between the Capital Market Authority and Royal Oman Police to improve the quality of services and fairness in determining insurance premiums. An E-link has been activated between ROP and insurance companies which is considered a breakthrough and material addition to the insurance sector in the Sultanate as example of community partnership and a method for reducing traffic accidents, injuries and deaths.
The system creates joint electronic database between ROP and insurance companies on the traffic history of each owner of vehicle as the insurance companies will be able to retrieve accurate data on vehicles owners enabling them to determine fair premiums for prudent drivers which would encourage self- regulation and compliance with traffic rules as the system would bring benefits to prudent drivers and reduce the losses insurance companies are suffering which would have positively impact on the performance of the national economy.
How the system works
The system would save time and efforts for clients and reduce the long procedures for the issuance and renewal of registration certificates. ROP would ensure renewal of insurance policy electronically without the need to produce signed and sealed policy as follows:
First Step (Role of Insurers)
Insurer’s officer enters the details of the policy and upload to the database through E-insurance portal to allow the Directorate General of Traffic of ROP to view the details of the policy when the insured reports for renewal of the vehicle.
Second Step (Role of ROP)
E-link between insurers and ROP is an integrated database on the record of the driver as it contain all basic information such as date of birth, place of residence, nationality, civil number, chassis number of the vehicle, type, make, power and all basic details on the vehicle supplied by the manufacturer. It also contain all traffic violations and accidents and details on the damage and claims and whether or not the file is closed.
The system provides for the users i.e. insurers and ROP the following benefits:
1. enhancing insurance operation by the company that will achieve more fairness in specifying the price when issuing or renewing vehicle insurance policies.
2. providing accurate statistics for minor and heavy accidents, their location, ages, sexes, nationalities, and specifications of attached vehicles.
3. limiting the number of avoidance of paying deductibles to insurance companies, and reducing the presence of the accident’s parties for finalizing their process.
4. reducing fabricated and double claims.
5. reducing fraud operations represented in the fraud stamps or vehicle renewal application forms.