Capital Market and Insurance Sector Supporting Pillars of the Comprehensive Development Process
The Capital Market Authority as regulator of the capital market and insurance sector acts for the interest of the national economy and protection of all the participants to achieve fairness, transparency and integrity based on best international practices. It aims to build solid base of legislations for the two sectors by issuing new laws and amending and updating the existing regulations in line with the global developments and the standards of International Organization of the Securities Commissions and the International Association of Insurance Supervisors. CMA works to attain its vision of making the capital market and insurance sector an engine for sustainable and diversified economic growth.
CMA endeavor to provide innovative and competitive financing alternatives that guarantee best employment of capital and funds in productive projects to upgrade the efficiency of the national economy in view of the characteristics of the capital market qualifying it to play a pivotal role in financing such projects. The capital market will play a greater role through the projects and initiatives approved in the national programme for economic diversification “Thanfeeth” which focus on three main sectors such as manufacturing industries, logistics and tourism as the market is a financing tool able to provide long term financing for huge projects as well being a tool for community participation through the savings.
In 2016 the Omani capital market provided RO 1.6 billion as financing for establishing and expanding investment activities in various sectors comprising oil sector, services sector, industry and transport which is evidence of the market’s ability to pool the savings from the individuals and institutions and direct to investment activities that contribute to moving and activating and economic wheel. The market value of the capital market sector represents 68% of GDP in 2016. The listed companies achieved satisfactory levels of performance during the past period. The market capitalization in 2016 was RO17.3 billion with a 9.5% increase over the previous year which was RO 15.8 billion.
In the legislative arena CMA issued regulatory regulations and rules the key of which were the Sukuk Regulation in addition to a number of amendments to the Executive Regulation of the Capital Market Law relating to reduction of disclosure term for issuers, adding new standards to capital adequacy rules, amending secure financing directives, reclassification of Markets in the MSM to six namely, regular market, parallel market, follow up market, third market, Sukuk and bonds market and issue right market. The move comes at a time in which the Omani capital market is witnessing expansion in the offered financing products with unique features such as bonds and Sukuk which are expected to witness huge turnout during the coming period.
CMA believes in the importance of the insurance sector and its vital role in the national economy. It achieved considerable progress in the regulatory supervision through the application of international standards and principles and continued enhancing the legislative infrastructures. The year 2016 witnessed the issuance and approval of a number of procedures and decisions that resulted from the continued process of evaluation, supervision, audit and inspection of the entities supervised by CMA. Further to capacity building within the organization and diversification of the services rendered to the market participants as well easing and simplification of procedures, qualification of the employees and upgrading their professional skills and competency as part of CMA’s strategy to develop the insurance sector and provide technical support for insurance companies to enable their compliance with the recent amendments to the insurance companies law to be able to convert into public companies by the end of 2017.
On the performance of the insurance sector, the audited financial statements of 2016 suggest the ratio of insurance sector’s contribution to the GDP is 1.8%. Gross direct premiums of the insurance sector increased by 2% to RO 450 million at the end of 2016 compared to RO 442.08 million at the end of 2015. The data indicates Takaful witnessed growth in 2016 with gross direct premiums of Takaful companies operating in the Sultanate reached RO 42.06 million which represents 9.3% of gross direct premiums of the insurance sector.
In view of CMA attentiveness to Omanization policy it continued, represented by the Insurance Business Training Committee, organization of specialized training programme in insurance, accounting and commerce to enable the national employees of the sector to compete for senior and medium positions in the companies rather than operational positions. 18 programmes were organized during 2016 with the participation of 530 employees as well as 62 participants in CII certification programme.
With regard to the insurance sector Takaful Law was issued in 2016 as a legislative framework for Takful companies which means the Omani market has shifted to new phases of development in the form of diversified products and options commensurate with the needs of the market and the trends of individuals and institutions. Also amendments were made to the Unified Motor Insurance Policy to furnish more protection to policyholder and more transparency plus additional options and benefits commensurate with the requirements of the participants and their desire to benefit from such product. CMA issued in the past year a guiding manual for quality assurance of insurance services provided to policyholders which include the minimum standards of quality assurance for the services rendered by insurance companies operating in the Sultanate.
To enhance cooperation and communication between CMA and the external entities operating in the global and regional capital markets and insurance sector CMA was keen to conclude a number of memoranda of understanding in 2016 for exchange of information and expertise with its peers in South Africa, Egypt, Tunisia and South Korea.
CMA will continue reviewing the legislative infrastructure and creating new products to enhance the performance of the capital market and insurance sector and increase the ratio of their contribution to the Sultanate’s GDP and upgrade their role in the national economy.