Oman Insurance Sector Faces Challenges Amid Global Turmoil

Marine Insurance and War-Risk Coverage in Focus

Recent global developments have highlighted the critical role of marine insurance and war-risk coverage, with significant implications for the insurance sector in Oman. The ongoing conflict has led to a drastic reduction in maritime traffic through the Strait of Hormuz, with daily crossings plummeting from an average of 120 to 140 ships to just five vessels, representing a staggering 95 percent decrease. This disruption poses substantial challenges for insurers and the broader economy.

Maali bint Salim al Majarfi, Acting Director of the Issues and Financial Instruments Department at the Financial Services Authority (FSA), addressed these issues at the Oman Insurance Summit and Awards 2026. She noted that the pricing of war-risk coverage, once minimal, is undergoing a dramatic transformation. “This unexpected risk has changed the landscape. Things may never be the same, even decades from now,” Al Majarfi stated, emphasizing the tangible nature of these risks.

Insurance Penetration and Economic Impact

The summit, themed around enhancing insurance penetration and contributing to GDP growth, revealed the low insurance penetration rate in Oman, which has remained between 1.2 and 1.4 percent over the past few years. This figure is significantly below both Gulf Cooperation Council (GCC) and global averages, indicating a considerable untapped market potential. Al Majarfi stressed that insurance serves as more than just a financial product; it is an economic enabler that can bolster GDP growth and enhance financial stability.

Despite the potential, the sector faces numerous challenges, including limited public awareness, product relevance, and trust issues. Al Majarfi pointed out that many insurance products do not adequately meet customer needs, with cost being a significant concern. Addressing these issues is crucial for improving the penetration rate and fostering a robust insurance culture.

Future Growth and Digital Transformation

Looking forward, digital accessibility is expected to play a vital role in the growth of the insurance sector. Al Majarfi highlighted the importance of enhancing access and convenience through digital solutions to raise awareness and build a stronger insurance culture in Oman. Additionally, the sector is witnessing the introduction of new products designed to meet emerging needs, such as motor natural catastrophe coverage and enhancements to third-party motor insurance.

The FSA is also pursuing legislative reforms aimed at increasing local retention capacity and reducing reliance on international insurers. Al Majarfi emphasized that this transformation is a shared responsibility, requiring innovation from both regulators and market players. As Oman Vision 2040 unfolds, the insurance industry is expected to play a crucial role in supporting sustainable growth across various sectors, including tourism, agriculture, and renewable energy.

Frequently Asked Questions

What is the current state of marine insurance in Oman?

Marine insurance is facing significant challenges due to a drastic reduction in maritime traffic through the Strait of Hormuz.

How does low insurance penetration affect Oman’s economy?

Low insurance penetration limits economic growth and financial stability, making it essential to address public awareness and product relevance.

What role will digital transformation play in the insurance sector?

Digital transformation is expected to enhance accessibility and awareness, fostering a stronger insurance culture in Oman.

What new insurance products are being introduced in Oman?

New products include motor natural catastrophe coverage and enhancements to third-party motor insurance.

How is the government supporting the insurance sector?

The government is evolving from a regulatory role to a market enabler, implementing initiatives and reforms to strengthen the sector.