Overall reduction in property values and new projects will see reduction or no growth in property, engineering and energy sectors. Medical and life segments may however see growth, albeit at a slower pace, says A R Srinivasan, CEO, Falcon Insurance Company.
How was the year 2014 for Falcon Insurance Company?
The year 2014 was a good one for us. In terms of business volume, it is the best year so far in the history of the company. We have seen good growth in all lines of business barring medical insurance, where we have been a bit cautious.
We expect to have very good results and all lines of business have been profitable. We have expectations to end the year with good technical results. Although the depression in the stock market means a little subdued investment income, we do believe the overall results will be good.
Oil prices are continuing its downslide. What will be the impact on the economy of Oman?
Much of Oman’s GDP comes from oil and gas and as such any major drop in oil prices will have an impact on the economy. The budget was prepared at $85 per barrel and any reduction below this will have an impact. For the year 2014, the major portion of the year saw oil prices above the budgeted one and as such the reserves will be enough for the year 2014.
I am confident the Government will be taking steps to counter this steep fall in oil prices and will be making judicious plans to make the best use of available resources and reserves for the development of the nation.
What are the opportunities and challenges in the year 2015?
We would expect some delays or staggering of projects. Some of the expected inward flow of foreign investment could see delay or temporary halt. We may also see some ‘non-essential’ projects getting pushed back. All this would be a challenge since it will have a knock-on effect on the other areas of the economy. At the same time, businesses would be looking at other avenues and for the economy to move away to the non-oil Sector. That would throw up some good opportunities. For example, we would expect the tourism sector to be a focus area to attract more business and develop as a ‘target’ for non-oil sector growth area.
How do you see the growth of the insurance industry in Oman in 2015?
I would expect the insurance industry also to face a bit of slow down, in parallel with the economy.
With projects getting delayed, the contracting companies will push behind their expenses. For example, purchase of new vehicles and equipment will be deferred. This will naturally lead to reduction in motor and equipment insurance. Similarly, reduction in imports of goods and materials will see drop in marine insurance. Overall reduction in property values and new projects will see reduction or no growth in property, engineering and energy sectors. Medical and life segments may however see growth, albeit at a slower pace than what was seen in the immediate past years.