Mandatory nationwide health insurance to transform UAE market

Mandatory health insurance for private sector employees and domestic workers in the UAE is set for nationwide expansion in 2025, encompassing all seven emirates. This development, according to Mustafa Oliyath Vazayil, Managing Director of Gargash Insurance, will have a significant impact on the labour market, healthcare sector, and insurance industry.

Currently implemented in Abu Dhabi and Dubai, the scheme will soon require employers in Sharjah, Ajman, Fujairah, Ras Al Khaimah, and Umm Al Quwain to provide health coverage. This expansion is expected to enhance worker benefits and trigger a substantial shift within the national insurance landscape.

“It’s a fundamental necessity for every individual, and ultimately, the employee will be the primary beneficiary of this coverage,” says Vazayil.

The inclusion of the northern emirates will significantly reshape the insurance market. “With the northern emirates now included, health insurance will become the largest segment in the portfolio of most insurers and brokers,” Vazayil explains, predicting a major market transformation.

From compliance to comprehensive coverage

Vazayil recounted the evolution of health insurance regulations, noting that initial requirements under the UAE Labour Law were often treated as a formality. “Most employers and clients saw it as just a ritual, and insurers would simply provide a certificate which effectively had no cover, just to comply,” he says. However, authorities intervened to address this issue, leading to the development of robust mandatory basic health insurance covers in Abu Dhabi and Dubai.

“Over the period, the authorities improvised the cover, and the mechanism of monitoring compliance, so now Dubai and Abu Dhabi have what I would consider as a decent medical insurance mandate for employers to cover employees,” Vazayil adds.

Strengthening the labour market and healthcare sector

The nationwide expansion of the mandate, under development for several years, has already prompted some employers in the northern emirates to provide health insurance. Vazayil estimates that 30-40 per cent of the market in these emirates already offers such coverage.

The new scheme is expected to further stabilise the labour market. “It will create stability in those markets, since employees will be more inclined to stay in their jobs, now that they're getting this cover,” says Vazayil.

The healthcare sector is also poised to benefit from increased demand. Vazayil expressed confidence in the sector’s capacity to adapt. “I think the healthcare sector has the capacity to cope. As numbers increase, it won't be a big challenge for them to enhance their infrastructure or human resources to cater to the demands.”

Addressing potential concerns

While specific details of the expanded scheme are pending, it is anticipated that employees will gain access to more cost-effective insurance options through group plans offered by their employers. “So generally, in group insurance dynamics, one tends to get a much more cost-effective solution,” Vazayil explains.

However, potential cost escalation for employers due to inflation and employee ageing remains a concern. “As people age, more medical conditions emerge, and more treatment occurs,” he says.

To mitigate these concerns, Vazayil emphasized the importance of robust regulatory oversight. “Cost control is essential to make medical insurance viable in the medium to long term and is critical for its sustainability as mandated today,” he says, advocating for protocols to prevent abuse and ensure responsible practices by healthcare providers.