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A.R. Srinivasan

OMAN - Finance

Made of Stone

General Manager, Falcon Insurance Company


After graduating in Commerce (with Honors) from the University of Delhi, A.R. Srinivasan qualified as a Chartered Accountant (ACA) from India. He is a Chartered Insurer (ACII) from the Chartered Insurance Institute, London. He is also a Fellow (FIII) of the Insurance Institute of Mumbai, India. He has over two and a half decades of varied experience in all aspects of the insurance industry specializing in the areas of reinsurance, underwriting, and claims management. Having worked in India, Oman, the UAE, and Bahrain, he has extensive knowledge of the regional market’s practice and customs.

"The insurance market is evolving at a slow and steady pace, especially life insurance."

How do you assess Oman’s traditionally low insurance penetration?

Currently, the Sultanate of Oman has very low insurance penetration as a percentage of GDP, as is the case in GCC. Presently, only third-party motor insurance is compulsory, whilst all others are optional. Unlike Western countries and many of its counterparts, people here think of insurance only as a last resort. However, the situation is slowly changing. A low volume of high-net-worth (HNW) individuals, both expatriates and Omanis, would purchase insurance. But, corporate companies are realizing the benefits of purchasing employee benefit insurance, medical insurance, workers’ compensation, and group life cover for their employees, and as such these classes of insurance have shown a remarkable increase in the last few years. To take advantage of the situation, Falcon Insurance Company extends excellent life and medical and workers’ compensation insurance coverage and has developed an extensive portfolio of corporate clients since its inception. Many of our clients are realizing the importance of insurance, and I am sure a few years down the line that retail insurance too will snowball into a bigger market.

Is the insurance market evolving as people see the benefits of insurance?

Yes, the market is evolving; however, in terms of buying insurance voluntarily, it is still a long way off. I personally am of the opinion that in the next five years, the Omani insurance market might witness a visible jump/enhancement in terms of insurance, especially in the personal lines segment. A decade ago, society operated in a different manner. In case of the unfortunate death of an earning member of a family, the relatives and friends would pool money and take care of the family of the deceased person. However, that is not the case now, and people are realizing the importance of saving and having a back-up plan in case of misfortune. The working population is growing, especially in the cities. We find that the percentage of couples working, both males and females, has increased over the last few years, thus directly increasing the potential for saving. Nuclear families have given them an opportunity to save more and invest wisely. They are indeed realizing the importance of the different types of insurance available in the market, and we find many people buying policies like those related to savings for marriage, retirement, and children’s education, for example.

“The insurance market is evolving at a slow and steady pace, especially life insurance.”

What do you think will be the impact of takaful?

Falcon Insurance Company is a conventional insurance firm, whereas takaful is an Islamic insurance concept, and as such it has a completely separate and different entity. The basic tenet of insurance is that the risk of one is shared by many. This concept does not change between a takaful insurance company and a conventional insurance company. Overall, the arrival of takaful companies will have an effect on our share of business in the market. In regard to the creation of new business by the availability of takaful products, we will have to wait and see.

How do you see the insurance market evolving over the next five years?

The insurance market is evolving at a slow and steady pace, especially life insurance. In terms of business, we haven’t seen any major new projects coming up in the last two years, and hence our focus is on retaining our clientele listing and, of course, developing and increasing our reach wherever possible. In the last few years (2004 to 2011) the number of insurance companies has increased drastically. However, the size of the market together with premiums have not grown as much. Oman continues to be regarded by many reinsurers as the most under priced and over competitive in the GCC. I strongly believe that this scenario will have to change in the next few years. Moreover, the regulators are now working toward forcing insurance companies to have a minimum capital of OMR10 million. New licenses are issued only with this criterion. That leaves existing companies that have a capital less than OMR10 million to either request shareholders to inject more funds, find new stakeholders, or look at merger options with other insurance companies with similar issues.

© The Business Year – December 2013



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