It was January 1, 2023 that the UAE's mandatory Involuntary Loss of Employment (ILOE) scheme went live. Since then, UAE companies too have signing up to offer the benefits to their staff, especially those with a high blue-collar workforce. Image Credit: Shutterstock

Dubai: Sign up for a job – and also the UAE’s mandatory job loss insurance scheme.

More UAE companies are offering the ILOE (Involuntary Loss of Employment) scheme as part of their incentives for new employees along with the medical cover and other benefits.

At Dh60 or Dh120 a year per person, the premium amount does not amount to much, but for blue-collar workers and junior level personnel, any direct saving that their employer provides has its advantages.

“More UAE companies could start offering the ILOE – for them it will be more an extension of the group medical insurance coverage they already provide employees,” said an insurer. "While no employer can offer complete job security, by paying for the job loss cover, employers want to show they care. 

“Companies with sizeable workforces and with sizeable blue-collar worker representation should ideally consider offering the ILOE directly. There are some enlightened early adopters of the scheme, and should soon see other join in. The cost for the employer is not high, and at the same time, they get to see a more committed workforce.”

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The ILOE was introduced as a mandatory requirement for all employees in the UAE from January 1, 2023, and in the first three months notched up more than 1 million subscribers.

Apart from individuals, there are companies who have signed up for the ILOE job loss coverage on behalf of their employers. “There are some big companies registering,” said Abdellatif Abuqurah, CEO for Dubai Insurance Co., the authorized insurer issuing ILOE policies on behalf of the insurance pool. “There are no major upgrades to the ILOE scheme as of today.

“There have been no pay-outs under the scheme as of today, since to be eligible for compensation, the individual has to be a subscriber for at least 12 consecutive months,” says Abdellatif Abuqurah, CEO for Dubai Insurance Co. Image Credit: Virendra Saklani/Gulf News

What ILOE provides

A breakthrough insurance product of sorts, the ILOE offers the insured payouts of up to Dh10,000 for up to 3 months if the premium paid was Dh5 a month. (These individuals should have basic salaries of less than Dh16,000 a month.)

For those getting Dh16,000 plus, the ILOE payout in the event of a job loss would be up to Dh20,000, also up to 3 months. (Here, the premium paid would be Dh10 a month.)

Having access to these insurance payments would, it is felt, provide some flexibility for the individual in managing his finances during a critical phase until a new job comes up.

The ILOE is part of the major changes the UAE has introduced in recent times when it comes to employer-employee contracts, and in the gradual expansion of pension schemes.

Higher medical insurance

All this comes at a time when the cost of medical insurance has been rising, denting the budgets of individuals and employers alike. “There is a rise in the price of individual medical premiums by about 6-8 per cent compared to last year,” said Ali Zaidi, General Manager of Aafiya TPA (third-party administrator, which works on behalf of insurers and their clients on handling medical coverage policies.

On group medical insurance, it's 10-15 per cent higher, but does vary from client to client. The pricing is managed according to loss ratios. Also, the pricing has to be such that the insurance company doesn’t end up being burnt by the portfolio.

- Ali Zaidi of Aafiya TPA

"Overall, premiums are increasing - and should - to tackle the inflation. This is due to various factors, including introduction of new technology to provide better healthcare solutions. (Plus), there is the general inflation, previous claims and also the increase in costs of healthcare facilities have led to the premium hikes.”

In fact, insurance premiums are rising across the board, including steep gains on motor renewals. Against this backdrop, if employees can get their ILOE premiums taken care of by the employer, that’s a straight Dh60 or Dh120 saving over a year. And that’s fine…