(MENAFN- Muscat Daily) Muscat- Oman's insurance sector will record the strongest year-on-year growth in 2018 of more than ten per cent, due to the introduction of new compulsory medical cover for expatriates, S & P Global Ratings said in a report released on Sunday.
Despite ongoing regulatory and competitive challenges in the insurance sector in the GCC countries, credit conditions for rated insurers will remain strong and broadly stable in 2018, S & P said in its report 'Gulf insurers: The gap between big and small insurers could widen in 2018'.
'We forecast that the insurance sector in Oman will record the strongest year-on-year growth in 2018 of more than ten per cent, due to the introduction of new compulsory medical cover for expatriates', it said.
S & P said the markets in Oman, Kuwait and Qatar will remain profitable but are subject to mounting competitive pressure in the absence of risk-based regulations and strictly applied actuarial pricing that could improve underwriting discipline.
'Medical insurance in Oman has been unprofitable at the technical level in the past two years, as the combined (loss and expense) ratio was above 100 per cent. The newly introduced medical cover for expatriates could further impinge on overall profitability in the sector, if not priced appropriately', the ratings agency said.
S & P said the more volatile investment and underwriting results and new regulations leading to increasing operating costs will continue to widen the gap in credit quality between large and small GCC insurers and put more pressure on insurers to consolidate.
'New regulations with higher capital requirements and other demands will add to costs and increase pressure on profitability for some insurers, in our view,' said S & P Global Ratings analyst Emir Mujkic.
S & P anticipates that the insurance markets in the GCC will continue to grow and remain profitable overall in 2018. However, having been strong in the past few years, gross written premium growth is likely to be slower in some markets in 2018.
'Since investment returns typically contribute to a significant share of earnings, geopolitical risks and fluctuations in global equity and commodity prices could lead to greater volatility in investment returns in 2018,' Mujkic said. 'We consider that these factors may therefore increase the gap between the large insurers, which are often more diversified and profitable, and their smaller counterparts.'
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