Muscat: The volume of the insurance sector investments crossed RO709.2 million by the end of the third quarter in 2020 at a rate of 6 per cent over the last five years.

Abdullah bin Salim al-Salmi, Executive President of the Capital Market Authority (CMA), has said that insurance firms’ assets investment regulation has been revised in a manner that allows more ability in engaging positively with developments in global markets and responding to opportunities and demands of the current stage.

In a statement to Oman News Agency (ONA), al-Salmi said that the regulation is sufficiently flexible to help insurance companies upgrade their performance, maximise economic benefits from the local market and stimulate economic activity in the country.

Al-Salmi pointed out that the volume of the insurance sector investments crossed RO709.2 million by the end of the third quarter in 2020 at a rate of 6 per cent over the past five years.

Insurance firms constitute the largest segment in government bonds investments, operating alongside the banking sector and pension funds.

Endorsement of the regulation came as part of a regular review of systems and procedures approved by the CMA to tune to developments in the field, particularly during the important stage of economic development within the context of the framework of the Sultanate’s renewed renaissance and ‘Oman Vision 2040’.

Al-Salmi added that the Omani insurance market offers a variety of services to the public, notably after the entry of collaborative insurance products, which garners 12 per cent of the total volume of the investment portfolio. Hence, it has been necessary to adapt to the private sector’s investment regulation to cover this aspect, he added.

He explained that the regulation of collaborative insurance provided investment in new Islamic Sharia-compliant instruments within specific terms that apply in the Sultanate and abroad. The regulation, he said, requires the professional handling of firms’ investment through approved annual investment policies and plans.

Committees will have to be formed to follow up these policies and plans, and this step will steer the investment experience into safe corridors, thereby avoiding any risks, said al-Salmi.

Al-Salmi pointed out that the regulation also requires that investments of insurance companies in banking deposits and investment agencies at banks and financial establishments (licensed by the Central Bank of Oman), government bonds, and Sukuk should be not less than 30 per cent of the total investments, provided that investment in a single bank or financial establishment should not be more than 50 per cent of total deposits therein.

The regulation also specified that investments of a company in Sukuk and commercial bonds within the Sultanate should not be less than 35 per cent. Yet, the regulation permits companies to invest in the shares of joint-stock companies, investment funds, and companies not listed on the market provided that investment should not go beyond 40 per cent of total investments.

Al-Salmi said that the regulation will allow for investment in guaranteed loans with life insurance and real estate policies provided these should not exceed 20 per cent of the total investments of insurance companies and in the condition that such investment is not made with the purpose of speculation.

The percentage may go up, but not beyond a ceiling of 30 per cent, after the approval of the CMA.