Oman Expands Motor Insurance to Cover Natural Disasters as GCC Health Capacity and Rules Tighten

Oman has taken a notable step in strengthening consumer protection and climate resilience by expanding mandatory third‑party motor insurance to cover natural disasters, in a move regulators say will better align products with evolving risk patterns. The Financial Services Authority (FSA) issued Administrative Decision 1/2026, amending the Unified Motor Insurance Policy Model to include a package of new benefits and clarify insurer obligations.​

Under the revised framework, motor policies will now provide coverage for damages caused by floods, cyclones and other natural hazards, which have become more frequent and costly in the Sultanate in recent years. Abdullah bin Salim Al Salmi, FSA executive president, said the change is part of the regulator’s “continuous review” of legislation to ensure adequate insurance coverage and improved market efficiency. He noted that the amendments reflect the FSA’s role in assessing the effectiveness of current rules and upgrading them to meet “societal preparedness” needs.​

The move comes as GCC insurance markets more broadly are shifting toward mandatory coverage expansion, stronger enforcement and digital monitoring, especially in health and motor lines. Saudi Arabia has rolled out electronic systems to verify motor and health insurance compliance, while the UAE continues to refine Dubai and Abu Dhabi’s universal health‑insurance frameworks. Ken Research projects that GCC gross written premiums will keep growing at double‑digit rates, underpinned by compulsory schemes, rising awareness and population growth to around 63.4 million by 2028.

Early‑2026 updates from a GCC healthcare analyst highlight where capacity is being added and care models expanded. In Saudi Arabia, new hospital projects and public‑private partnerships are being launched in Riyadh, Jeddah and secondary cities, while in the UAE, operators are upgrading specialist and outpatient facilities to meet demand from both residents and medical tourists. These investments, combined with stricter insurance enforcement, are expected to drive higher per‑capita health‑spending and premiums over the coming years.

Oman’s regulatory shift on motor cover is also part of a broader move in the GCC toward incorporating climate and catastrophe risk into retail products, not just commercial and reinsurance contracts. As storms, flash floods and heatwaves intensify, regulators are nudging insurers to price and reserve more accurately for such events, while ensuring that households and SMEs are not left exposed due to policy gaps.

Foreign insurers and reinsurers are watching closely. The GCC’s trajectory toward mandatory, better‑defined health and motor coverage has historically attracted global players seeking growth and diversification. Oman’s new rules may spur interest from regional carriers looking to expand in Muscat and beyond, especially if enforcement is strong and pricing reflects risk rather than pure competition.

For policyholders, the immediate impact will depend on how quickly insurers incorporate the expanded benefits into product design and pricing. Regulators are betting that better coverage—supported by sound actuarial assumptions and reinsurance arrangements—will ultimately raise trust in insurance and improve economic resilience when natural disasters strike.