Omani insurance company representatives, meeting with the country’s minister of commerce and industry, pointed the finger at automobile spare parts dealers for what the government had earlier said were unreasonably costly car insurance premiums.
Speaking to the Time of Oman after the meeting, the insurance representatives said that the spare parts dealers were charging as much as 200 percent above the going price for parts, creating an unusually high claims ratio and pushing premium costs upward. Sources told the newspaper that prices for automobile parts in Oman are on average 25 percent more expensive than those being charged in Dubai, and in the Omani capital of Muscat, prices can be as much as 20 percent more expensive than in the outlying areas.
Two months ago, the ministry of commerce and industry asked the insurance companies to bring down premiums on motor insurance. Concurrently, a committee was set up to study the premiums being charged by the five national and nine foreign insurance companies operating in Oman.
To illustrate how severe the situation has become, one insurance executive told the Times of Oman about a client’s whose Japanese-made car was badly damaged. The client arranged a quotation for the parts to be replaced, and that came to RO 9,000. The problem was that the showroom price for the same car was about RO 3,000.
What makes things worse, the insurance companies said, is that when a car is under one year old, the law stipulates that repairs have to be made in the dealer’s workshop only.
The insurance companies claim that proof of the fact that the price of parts can be drastically reduced is in the fact that spare parts dealers sometimes offer discounts of up to 60 percent on their products.
The Omani insurance market has been in a slump for about three years already, with most of the companies reporting minimal or no profits. The chief reason for the situation is said to be the country’s chronically weak stock market. – (Albawaba-MEBG)