Oman: Insurance Market to Hit $1.3 Billion in 2024 | Al Bawaba (2024)

Oman’s insurance market is estimated to reach $1.3 billion in 2024, registering a compounded annual growth rate (CAGR) of 2.7 per cent from 2019, according to the GCC Insurance Industry report published by Alpen Capital (ME) Limited, a Dubai-headquartered investment banking advisory firm.

The life segment is estimated to grow at a CAGR of 6.1 per cent while the non-life segment is estimated to grow at a CAGR of 2.1 per cent between 2019 and 2024. Growth in the life segment is expected to be the highest in the region and is supported by a rising population, which is projected to grow at a CAGR of 3.1 per cent between 2019 and 2024.

The implementation of mandatory health insurance from 2020 and continuation of health cover by employers will support the growth of the non-life segment. The number of employees covered under the new mandatory health insurance scheme is expected to surpass than two million, in addition to Omanis working in the private sector and visitors to the Sultanate.

Furthermore, Oman is witnessing a series of construction projects as the government diversifies away from its traditional sectors. In 2019, the government allocated $ 9.6 billion for infrastructure development, industrial and services projects and, today, the country has approximately 2,410 active construction projects with a combined value of over $190.0 billion.

The strong infrastructure developments are likely to expand the underwriting base for non-life commercial lines. However, insurance penetration and density in the country are expected to slightly drop to 1.4% and $259.3 by 2024.

According to the report, the GCC insurance market is projected to grow at a CAGR of 4.3 per cent from $29.2 billion in 2019 to $36.1 billion in 2024. Sustained economic growth, increase in population and substantial infrastructure development is among the leading factors that will facilitate the growth of the sector. Additionally, governments’ efforts to strengthen regulations, introduce mandatory lines and diversify the economy are also likely to drive GWP for the insurance industry.

The gradual slowdown of the insurance industry witnessed over the past two years is likely to continue until 2024. However, GWP is expected to improve relative to the subdued levels of growth recorded in the recent past, as long-term growth prospects continue to remain positive.

Insurance penetration in the region is expected to remain between 1.8 per cent - 1.9 per cent from 2019 - 2024, below the global average of 6.1%, offering scope for growth in the sector. Insurance density in the region is expected to increase from $502.9 in 2019 to $555.8 in 2024.

“The GCC insurance industry which maintained a positive momentum over the years witnessed a slowdown in gross written premium (GWP) due to sluggish economic conditions during 2016 and 2018. However, going forward, we anticipate the GCC insurance sector to grow at a moderate pace owing to an economic revival, growing population, strengthening regulatory reforms and continued implementation of mandatory insurance coverage. Infrastructure development, in line with upcoming mega events, is expected to further aid growth in the segment,” says Sameena Ahmad, Managing Director, Alpen Capital (ME) Limited.

“The M&A sphere in the GCC insurance sector has remained active over the past two years with several intra-regional and cross border transactions as companies seek to build stronger balance sheets to sustain the stringent reserve and solvency requirements. In addition to interest from foreign players, we expect to see continuing M&A activity as companies develop technological capabilities to broaden their product offering and improve profitability,” says Krishna Dhanak, Executive Director at Alpen Capital.

Life insurance GWP is projected to grow at a CAGR of 4.9 per cent to reach $ 4.7 billion in 2024. Growth rates across each country vary based on their projected population increases. On the other hand, the non-life insurance market is expected to grow at a CAGR of 4.3 per cent, primarily aided by mandatory insurance business lines, new regulations improving the pricing of policies, anticipated recovery in economic activity, and subsequent rise in infrastructure investments. The non-life segment will continue to comprise 86.9 per cent of the total insurance market at $ 31.4 billion in 2024.

As part of economic recovery efforts, regional governments have made higher budget allocations and undertaken a series of measures to improve the business environment and boost demand in key sectors. Sectors such as tourism, aviation, retail, hospitality, real estate and construction, alongside significant infrastructure spending in the run-up to Expo 2020 and World Cup 2022, will provide a boost to the regional economies. GDP (at current prices) across the GCC is anticipated to grow at a CAGR of 3.3 per cent between 2019 and 2024.

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