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All COVID-19 treatment costs are being absorbed by the UAE Government. And that applies to everyone irrespective of whether the individual had taken out medical insurance or not. Image Credit: Gulf News Archive

Dubai: UAE’s medical insurers are finding themselves in the best possible state of health - despite COVID-19. In fact, insurers’ improved health has a lot to do with how the healthcare sector and UAE residents tackled the pandemic.

Clear directions were issued by the authorities that residents should stop making trips to hospitals or clinics unless it was a medical emergency. All elective procedures related to treatments were postponed.

That wasn't all. “In February, UAE Government made it clear that all costs associated with COVID-19 cases would be paid by it,” said an insurance administrator at a leading healthcare operator. “And that these would be paid irrespective of whether the individual had medical cover or not.

“A second reason is because of the sharp drop in the number of outpatient cases for non-COVID-19 treatment over the last three to four months. It meant insurers benefitted from having to pay less on claims during this period. These cost benefits would have been substantial.”

Looking back, medical insurance was one of the few categories that was left unscathed during the pandemic, as it took a toll on just about every other business activity. It could be months, even a year or more, before those sectors come anywhere close to a full recovery.

Back to full operations

Hospitals and clinics will in the next few days get back into full operational mode. Multiple healthcare professionals cutting across specialisations confirmed their salary packages are being reinstated in full from July onwards.

But whether they will immediately start seeing a proportional increase in outpatient cases immediately remains to be seen. This more than anything will have a bearing on insurers’ costs, and what changes there could be on policy renewal premiums in December.

“I think the price impact on health insurance remains to be seen,” said Avinash Babur, CEO of InsuranceMarket.ae. “On the one hand, the unnecessary use of healthcare facilities for outpatient services will decrease, especially through the wider adoption of telemedicine.

“Of course, many companies will look for ways to cut costs - health insurance premiums may be no exception there.”

Aster Health
All available resources at local hospitals were placed in tackling the pandemic. It meant that where possible, elective procedures were postponed.

They actually dipped

For those annual policies that got renewed in April, premiums on medical insurance in Dubai actually dropped. “We are seeing a lot of annual renewals being made where insurers were only taking 11 months’ premium,” said the insurance administrator. “Clearly, insurers were passing on some of the benefits they got from lower claims in recent months.

“There’s also ample pressure from organisations to reduce their employee coverage premiums.” (January and April are the months when policy renewals take place, especially on group coverage.)

All part of the gameplan

Jayan K., CEO of Right Health, which operates a network of clinics, says that, eventually, it’s the employees who will feel the pinch from the tightening up of medical policies.

“Those employees enjoying higher coverage and benefits will be forced to accept lower premium products,” Jayan said. “The financial pressures on employers to reduce their operational costs will result in them choosing more affordable categories like restricted networks, essential plans and so on.”

The next few weeks will make the situation clear. Businesses across sectors have gone through extensive layoffs, and by the time the next round of renewals come up, insurers and healthcare companies will have a more informed view about the number of people remaining under group cover.

I don’t see possibility for insurance companies or brokers to reduce the premium since there is a cost involved

- Jayan K of Right Health

Easy on the wallets

If insurers do reduce premiums for the next renewal cycle, it will be some relief for individuals who need to have their family members insured and organisations that have to take out cover for the workforce. There is also pressure building up from employers on insurers to reduce the policy payments.

“Organisations are getting insurers to cut down on the benefits – dental cover might suddenly not be there, or there will be limits placed on maternity-related cover,” the administrator added. “Also, more policies are being issued that reduces the healthcare network that the insured can access.

“Policies are clearly bringing down the number of approved hospitals and clinics they can go to.”

Clearly, there are hard bargains driven on both sides. Babur, for one, believes there will be limits to the reduction in premiums or incentives insurers can offer on medical cover.

“The minimum benefits on any health insurance policy is typically stipulated by the regulator in each emirate,” he said. “Many employers and individuals do opt for broader cover and healthcare network providers.

“Yes, there will be budgetary pressures on both insurers as well as policyholders, and we may see a resulting reduction in benefits on many plans.”

Copayments are generally a great way to decrease cost pressure on medical insurance and curtail unnecessary utilization

- Avinash Babur of InsuranceMarket.ae

Watch out for the percentage

More organisations could increase the “co-payment” component on individuals’ policies This is the share of the cost the individual will have to pay for each consultation or when buying a prescribed medication. The current co-payment percentage is 10- or 20 per cent.

“Copayments are generally a great way to decrease cost pressure on medical insurance and curtail unnecessary utilization,” said Babur. “But without compromising on the coverage.

“We typically advise this as a productive tool to address cost-related concerns [of employers]. And we have seen a gradual increase in copayment requirements in health plans.”