Insurance firms feel heat with soaring healthcare costs

Abu Dhabi: Many Insurance companies are feeling the pressure of rising costs of healthcare products and feel that subsidised services are going to hit the bottomline.

With Abu Dhabi's health insurance schemes set to become a reality for all residents of the capital this year, some insurance companies are sceptical about their business health.

Medical experts and officials are also wondering how long the Abu Dhabi Government can subsidise health insurance companies.

Under law 23 a number of partnerships have been announced between Health Authority Abu Dhabi (HAAD) and international healthcare institutions to deliver internationally recognised quality and service standards with stable product pricing.

Basic product price

In addition to that the executive council of HAAD agreed with the National Health Insurance Company, Daman, to keep the premium basic product stable at Dh600 for 2008.

"The basic product has a claims cap arranged with Abu Dhabi Government who is the re-insurer of the basic product and subsidises Daman in case the claims exceed the cap," said Gulam Mohammad Teli, Director, Technical Division of Daman.

"Abu Dhabi Government wants to support the product for the low income segment and have decided to keep the premiums this year unchanged as Dh600," said Teli.

Teli said Daman want to change the myth that health insurance is a losing business.

"We are specialised in our field and know how to manage our portfolio profitably. It is possible to write health insurance as profitable business if a company applies correct and professional pricing policies and does not discount it by all means just to grab market share, and apply state of the art management and IT tools," he said.

"We do expect that healthcare costs will increase 8 to 10 per cent in 2008. However, we will try to keep the increase on our enhanced business below the general inflation rate and strongly believe that we can manage it."

According to Teli, Emiratis will be included in the health insurance scheme in 2008. However, Abu Dhabi Government will be the risk carrier for the nationals, and Daman will manage the business on behalf of the government.

"We are pleased to confirm that we are ready to serve the nationals soon and we do not foresee major obstacles in our operations." Other insurance companies are hoping the government introduces compulsory medical pricing solutions since service providers are far too expensive.

Key objective

Dr Abdul Zahra Abdullah Ali, General Manager, National General Insurance Company (NGI), previously analysed the constant growth trend of medical costs. He said that medical insurance covers range from local area coverage of in-patient care facilities to full medical coverage; in addition out patient care and all drugs and accessibility of diagnostic services.

"It is one of our key objectives as a regulator to ensure affordable healthcare for all residents of Abu Dhabi and we do not want to unnecessarily increase the burden on the employers who finance the health insurance premiums for their expatriate employees," said Dr Finn Goldner, Head of Health System Financing, Health Authority Abu Dhabi.

Other experts in healthcare and management question the subsidy system as there is a lack of early detection and treatment facility among patients suffering from diseases such as diabetes, hypertension, cancer and osteoporosis.

Demand: Increase in premiums

Many insurance companies are hoping that the Abu Dhabi Government introduces compulsory medical pricing solutions since service providers are far too expensive.

They say insurance companies are forced to go along and add a 15 per cent increase in premium rates.

Since the beginning of January 2007 there has been an increase of 15 to 75 per cent in the cost of health services amongst various hospitals and service providers, said Mohammad Rayees, Assistant General Manager of National General Insurance Company (NGI).

"The increase in rates is not being met by insurance companies throughout the UAE since we are not making profit on health insurance. It is actually an expense on us. Insurance companies are in a difficult situation and are worried. The pricing policy should be adjusted," said Rayees.