Oman’s nancial services and insurance sectors are typical of the small GCC markets with a few notable distinctions. Oman is characterised by above average levels of political and social security. Indeed, Oman’s banking system is pro table and stable, with an average return on assets of 1.6%, return of equity of around 11%, capital adequacy ratio averaging 16%, and nonperforming loans amounting to around 2.3%. As one of the smallest GCC economies, Oman’s growth is relatively limited compared to the other GCC countries. This means that while there is a fairly safe and predictable market for banks, investment rms, and insurance brokerages in Oman, the government and the private sector both have to pursue reforms to make Oman more competitive, more secure, and pro table for the future.
The insurance sector, which has historically remained underdeveloped, is undergoing a series of legal and regulato- ry changes that should see the sector’s prominence and pro tability grow in the coming years. The insurance sector is considered overcrowded, and is one of the smaller insurance markets in the region. Premiums are low relative to the size of the economy; insurance penetration stands at less than 1%, well below the global average (7%) and lower than that of the Gulf region (1.2%), making Oman the second smallest insurance market in the GCC. The top four companies (out of 23 registered insurers) by market share comprise 50% of the entire market, signalling a highly fragmented and overcrowded sector.