Oman’s Economy: Insurance Ebbs and Flows
Growth in Insurance Company Profitability
There has been a substantial profit escalation for Oman’s insurance companies compared to last year. The figure for 2011 was 12.2 percent in gross premium income – an increase of 30.66 RM million from 2010.
Which companies are the main players in this growth spurt? In first place, comes the Dhofar Insurance Company, boasting a gross premium of RO52.23 million; second, National Life Insurance with RO35.21 million and third, Al Ahlia Insurance with RO29.52 million.
Infrastructure Projects Boost Insurance Demand
What might be leading this boost in profit margin for Oman’s leading insurance companies? There are different reasons for each of the companies, but for Al Ahlia Insurance it seems that the huge infrastructure development projects that are being undertaken in the country have been influential. Infrastructure projects currently in progress are: railway plans; developments for ports and airports and more. Of course, with such extensive projects in place, insurance will be required. Indeed, as the CEO for Asia and the Middle East of the RSA Group (that has a major stake in this insurance firm) said, there will be an increase in demand for insurance both during the construction and throughout the entirety of the project.
Medical and Auto Insurance
Then there is the increased demand for both medical and auto insurance. According to the GM of National Life Insurance, S. Venkatachalam, since the economy was improving so that salaries increased and there was a reduction in unemployment levels, people had more disposable income. This resulted in them being able to buy more cars and thus requiring insurance for that. However, Venkatachalam does not believe that this is necessarily the reason for the major demand increase. He said that most years the growth is just as high – standing at around 12 percent for the automobile market.
In addition, it seems that a recent report has shown that people living in Oman are quite satisfied with the medical insurance available in their region. This could be due to the fact that governments under the Gulf Cooperation Council (GCC) umbrella, have poured significantly more financial resources into the healthcare industry in the countries riddled with serious chronic health issues such as diabetes, obesity and heart problems. Coming just behind Qatar and the UAE, was Oman, boasting a satisfaction rate of 78 percent. While indeed there are other issues to be overcome in this industry – such as staffing and quality control – this should still be good news for those living in Oman and indicative once more of how the country’s economy is improving.
Satisfaction Not Guaranteed
But it’s not all that clear. Just recently, around 500 Nagarjuna Construction Company employees tried to strike about how badly they are treated (but were prevented from doing so by ROP officials). One of their grievances is that even though the company is making large profits, their salaries are not increased (they get paid an average of between RO55 and RO75), and get no healthcare, insurance or quality food provisions. If they get sick they do not receive any treatment from the company and they claim the food provided is unhygienic (which will also lead to sicknesses). Although the actual profit margin of the construction company is somewhat hard to prove. According to an article written last month in NDTV Profit, share prices for the company plummeted more than 10 percent.
Ultimately while at first glance it looks like insurance companies are faring well in Oman due to improved economic/employment conditions, there is a lot more going on than meets the eye. Thus while Oman is on the right tracks, there is more work ahead to ensure improved insurance and customer satisfaction levels.