UAE's compulsory medical insurance for all - what will insurers do on basic premiums?
Early 2023 should see UAE confirm launch date for universal medical insurance
Dubai: With UAE planning compulsory health insurance across all emirates, citizens and residents will have more medical insurance plans to choose from. And even on what they need to pay as annual premium on their medical insurance.
But this need not mean that the basic health cover will be the same across each of the emirates, insurance industry sources say. Each emirate could have the flexibility to decide what its ‘basic’ healthcare insurance premium should be, they add.
“The basic plan premiums would be below the Dh1,000 bracket,” said a spokesperson at Dubai Insurance. “But a standardisation of rates in all the emirates will be quite unlikely due to differences in regulator guidelines and minimum benefits offered in the basic policy.”
The date for the UAE-wide compulsory medical insurance rollout is yet to be confirmed, but insurance and healthcare industry providers are hopeful that clarity on the launch will be provided early next year itself. Currently, only Dubai and Abu Dhabi have mandatory health insurance requirements for its residents, and which need to renewed annually.
In Dubai:
* For a child, it would start from Dh789.
* For the wife, the annual premium would be from Dh1,700.
* For investors and Golden Visa holders, the packages start from Dh900.
* For parents of residents, medical cover could start from Dh2,100.
In Abu Dhabi:
* For those up to 17 years, the typical medical premium would start from Dh1,670.
* For 18-40, the average would be Dh2,000.
* There is an additional Dh750 for maternity.
A post-COVID boost for insurers
For the UAE’s insurance industry, this will be one of the biggest breaks coming their way, and at a time when the need for optimal healthcare coverage has never been felt this acutely before. Even in a post-COVID healthcare landscape.
“Once implemented, the new compulsory health insurance scheme in Sharjah, Ras Al Khaimah, Ajman, Fujairah and Umm Al Quwain could double the premium income from medical insurance of about Dh1 billion over the next two to three years,” said Emir Mujkic, Director and Lead Analyst - Insurance Ratings, S&P Global Ratings.
However, the exact premium income will depend on the exact pricing, the table of benefits, and timing of the implementation, which remain uncertain at this stage.
COVID had done its part in ensuring that residents did not treat coming under medical cover as a mere process to be done for residency permits and other government-facing requirements.
The UAE healthcare sector will see more of Diagnosis Related Group (DRG) payment systems slotting in for tabulating in-patient and daycare treatment and surgeries. And for multiple treatment or consultation process.
This will help insurers too. What this means is cost of treatment will be 'capped or standardised irrespective of the actual cost on the healthcare provider’s side," said Avinash Babur, CEO, InsuranceMarket.ae. "This has been introduced to contain the cost of claims. However, in the event that an actual cost is lower, there can still be a chance that insurers lose out and providers claim for costs that are more than the actual."
A growing resident base to call on
Plus, the resident base in the UAE has been on a steady increase all through this year, and with every indication it will continue to be so in 2023.
The spokesperson at Dubai Insurance says a wider base of medical insurance holders needn’t mean premiums they pay will immediately come done. Instead, “the premiums in Sharjah, Ras Al Khaimah, Ajman, Fujairah and Umm Al Quwain (when it becomes mandatory) will be competitive due to cheaper provider tariffs for payers,” the spokesperson added. “But the overall loss ratio (LR) on medical insurance (in the UAE) seems to be high this year due to the increase in claims incidence, tough competition and lower premium target from clients.”
Need for tight insurer scrutiny
Avinash Babur, CEO of InsuranceMarket.ae, reckons that compulsory health cover will become law in the country as early as Q2-2023. He echoes the sentiments of most insurers when he says that universal coverage should not be a reason to drop premium rates. That will only lead to a dire financial hazard for local medical insurers.
“Premiums will need to rise to take into account post-pandemic costs being seen on insurer balance-sheets,” said Babur. “Suppliers of services will need to raise their game – insurance providers will looking for partners who offer wide value propositions, elevated offerings, value for money, competitive edge, etc.
“And there will be increased regulatory oversight in 2023 from the UAE Central Bank, leading to more audits and closer scrutiny. This means only the strongest will prosper and flourish – some may exit the market, and there may be more merger and acquisitions activity.”
Already heavy on M&A
In UAE’s insurance space, 2022-23 is among the busiest phases for consolidation, as evidenced by Dar Al Takaful and Watania coming together, as are Takaful Emarat and Salama. Then there is Dubai-based Aman selling a key division as it plans a transformation into an investment company.
Premiums will need to rise to take into account post-pandemic costs being seen on insurer balance-sheets.
It is into this insurance sector flux that the UAE is bringing in universal health insurance requirements. Handled well, this can be such a growth opportunity for insurers in the medical coverage space. And a chance for many of them to get their margins back into some health.
Mujkic of S&P Global Ratings is sure about what those opportunities are. “The announcement to extend mandatory health insurance cover to the all the emirates will benefit local residents - and positively support premium growth in the UAE insurance sector.
“Currently, health insurance cover is only compulsory in Abu Dhabi and Dubai, which means that a significant part of the population is not adequately insurers. About one-third of the total population of the UAE lives in Sharjah, Ras Al Khaimah, Ajman, Fujairah or Umm Al Quwain…”
Clearly, a bonanza awaits UAE's insurance sector in 2023 as more of these residents come under the medical cover umbrella. What needs to be seen is how well insurers inject healthy growth to the premiums.
Studies have shown that universal healthcare access and a robust health insurance not only help in optimal utilization of medical resources...
Studies have shown that universal healthcare access and a robust health insurance not only help in optimal utilization of medical resources, but assures healthcare from ground level to upwards for all.
If a blue-collar worker or low income group individual is in the care of a GP or primary healthcare centre , he or she, will be able to manage many non-communicable diseases in the early stages. Mandatory health insurance is the vital bridge linking all stakeholders - the primary user, the diagnostic tools , the outpatient clinics, and the hospital. It will go a long way in reducing the annual burden of disease on the state.
- Dr Jamil Ahmed Founder and Managing Director of Prime Healthcare Group