Emirates Insurance Association said compulsory health insurance is almost complete in all Emirates and an announcement is expected in first quarter of 2023
Anand SinghSenior Counsel,Transport & Insurance
On the sidelines of the 8th Health Insurance Conference, an annual event organized by the Emirates Insurance Association, the officials of the Emirates Insurance Association said that compulsory health insurance is nearing completion in all Emirates and an announcement in this regard is expected in first quarter of 2023. Following this, the mandatory health insurance will be in place for the rest of the Emirates in UAE, which are Sharjah, Ajman, Fujairah, Ras Al Khaimah and Um Al Quwain. This will catapult the total GWP for the UAE insurance market to AED 50 billion, from AED 41 Billion in the year 2021 (up from AED 39 Billion in 2020).
The UAE is a constitutional federation of seven Emirates: Abu Dhabi, Dubai, Sharjah, Ajman, Umm Al Quwain, Ras Al Khaimah and Fujairah. The journey towards mandatory health insurance started in 2005 with Abu Dhabi passing the Abu Dhabi Health Insurance Law (Law No 23 of 2005) ("Abu Dhabi Health Law"), which made it mandatory for all resident to have the basic health insurance cover from 1 June 2006. All employees and their family members should be covered by their employers and every individual must provide cover for those that they sponsor. To implement these, the health insurance regulatory system was divided between two regulators, the Health Authority Abu Dhabi ("HAAD"), subsequently renamed as Department of Health ("DOH"), which is responsible for regulating the health sector, and the Abu Dhabi Health Services Company ("SEHA"), which is responsible for managing government-owned healthcare facilities in Abu Dhabi.
In 2013, Dubai issued the Law No 11 of 2013 ("Dubai Health Law"), which was implemented in phases until March 2017. The requirement is similar to that under the Abu Dhabi Health Law, but the Dubai Health Law limits the requirement for employers to provide insurance to only the employees, and the total coverage amount is capped at AED 150,000, compared to AED 250,000 under the Abu Dhabi Health Law. The plan provided under the Dubai Health Law established the minimum mandatory cover that must be in place, for those under the salary of AED 4,000; this was termed as the Essential Benefits Plan ("EBP"), which has evolved over the years since it was first introduced, depending on the market forces.
Whilst it is difficult to provide numbers on how the introduction of mandatory health insurance in Abu Dhabi and in Dubai shaped the market, we understand that for the year 2015, the GWP of the UAE insurance market was c. AED 31.5 Billion, which has grown to AED 41 Billion at the end of year 2021, of which health insurance accounts for almost half of these premiums. Health insurance forms a major factor in the growth of the insurance industry in UAE, and similarly health insurance is one of the most important factors for the growth of the healthcare sector in the UAE.
It is not just the introduction of the insurance, but the manner in which it was implemented and the way the regulations evolved, that led to a sustainable growth of the sector. Amongst the various initiatives that were rolled out, some of the notable ones are the diagnosis-related group ("DRG"), which introduced diagnostic linked grouping and helped insurers contain the claim costs and, therefore, the loss ratios.
Telemedicine was also introduced in 2017-18, allowing for access to doctors and to medical care for those who are unable to visit physically. Over the course of its implementation, telemedicine has also become a tool for insurers to optimize costs, where the use of telemedicine will reduce the per member utilization and thus reduce claims. Telemedicine has also helped in managing cancer related benefits, wherein providing telemedicine as a benefit for cancer care has been mandatory under the EBP. The biggest example of how a good health infrastructure helps through contingencies is COVID 19, wherein the use of telemedicine exponentially increased and became a tool of necessity, rather than just alternate option. It is safe to say that the increased adoption of telemedicine by the insurers and by the healthcare providers greatly assisted in the seamless movement of healthcare delivery to a remote mode.
Compulsory health insurance, once implemented across the other Emirates in UAE, will catapult UAE into a position where a unique mix of private and public partnership in the health insurance space will lead to universal coverage across the country.
A robust healthcare system doesn’t just help the core healthcare sector, but also assists a number of ancillary sectors around these, switching to remote care also led to medicine delivery to a customer’s location, thereby assisting the logistics sector to form a new source of business. Further, having developed a sustainable model of healthcare, including funding, in the next phase of growth the focus is on developing these Emirates for medical tourism, and a lot of work is already going into preparing the systems to support medical tourism. Medical tourism will not only be a source of increased revenue for the healthcare sector, but also bring increased tourism to the country, thus helping the hospitality sector and the overall economy.
There are, however, some learnings in relation to the implementation that need to be borrowed by the other Emirates when implementing their health insurance program. The most important being the implementation of the compulsory health insurance requirement, which is generally linked to the visas for expatriates. However, these are mostly 12 month policies and since the renewed policy is not required to be submitted, it is very common to find that the sponsors do not renew the policy beyond what is necessary for visa purposes. To ensure universal healthcare, it is important that the law is properly implemented and executed.
The other key learning relates to pricing of the product. Given the nature of the product, for the product to make profit and be sustainable, the same can only be achieved when there is sufficient volume; but to achieve such volume the payers should not be allowed to undercut each other in terms of the pricing. The Dubai and Abu Dhabi health insurance market has already seen departures of some of the big reinsurers from participation in the compulsory health insurance because of lack of transparency in pricing.
While no official announcement has yet been made, compulsory health insurance, once implemented across the other Emirates in UAE, will catapult UAE into a position where a unique mix of private and public partnership in the health insurance space will lead to universal coverage across the country. If these are connected together by a Federal framework, there can be easy data sharing across healthcare stakeholders in different Emirates, which will assist in claims fraud prevention and to provide seamless healthcare services to residents, without any discrimination basis where the resident is residing or working. To further the agenda of universal healthcare, it will be ideal if all the Emirates, including Dubai and Abu Dhabi, can agree on the same level of coverage and insurance benefits.
For further information, please contact healthcare@tamimi.com.
Published in January 2023
