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Health Insurance Requirements for Expats
Visitors to the UAE and residents without health cards or with expired ones, have to pay full fees for hospital beds and surgical operations.
The UAE government provides its nationals with a health care system administered by its Federal Ministry of Health. For expatriates (non-UAE nationals), which currently comprise 80% of the population, a payment of Dhs 300 (USD 82) per year is required to obtain a health card which entitles the holder to access to medical services at all MOH facilities for minimal fees. The health card and/or medical insurance is a mandatory requirement for each expatriate and without it expatriate workers will not get a work permit in the UAE. In the past, even temporary visitors to the UAE without International Health Insurance were also able to get relatively free health services during their stay in the UAE. These costs comprise of approximately 80% of the MOH budget.
MOH officials confirm that although the Ministry collects approximately 500 million dirhams annually in medical fees it spends five times more this amount on medical services. The MOH also believes that medical services and medicine is being misused. Even people on visit and transit visas go to government hospitals and undergo complicated surgery almost free of charge which would cost them Dhs 50,000 to Dhs 250,000 in private hospitals elsewhere.
In lieu of the above and to ease its burden, the MOH announced last summer two new policy decisions relating to the revision of medical charges in government hospitals, clinics or health centers as well as the dispense of medical prescriptions to patients.
The first, which took effect on May 1, 2001 states that government clinics will no longer provide free medicines to expatriate cardholders, but they will have to purchase them from private pharmacies.
The second, effective from April 1, 2001 states that visitors to the UAE and residents without health cards or with expired ones, have to pay full fees for hospital beds and surgical operations.
These policy changes actually point towards greater involvement of the private sector in health care and saving the government millions of dirhams. The MOH is planning, in coordination with other authorities, to ensure all expatriates have medical insurance in the future, whether through private insurance schemes or through employers. In fact, in 1999 the MOH did call for proposals for a comprehensive insurance plan from local health insurers and international consultants were asked to review the proposals and submit a detailed blueprint, but proposals did not match the Ministry's expectations, since the insurance companies offer was to collect full insurance premiums while reimbursing the government for its expenses at the current subsidized rates. This reiterates the fact that the private sector health care providers should be and will be involved as a substitute.
UAE Health Insurance for Expats
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Insurance sector in the UAE is expected to double by 2010 along with its demand for new employees, according to Emirates Insurance Association, an umbrella organisation for US$3 insurance companies operating in the country.
Sheikh Faisal bin Khalid Al Qasimi, chairman, Emirates Insurance Association, said yesterday: "The UAE is witnessing growth rate of 15 to 20 per cent annually in the insurance business as its traditional role is to support and underpin the development of all sectors of the economy. As the UAE opens up the insurance sector, international insurers are looking to enter (it). This will increase job opportunities, intensify competition and bring new products and services and help the UAE insurance industry to mature. Local companies, however, are firmly established and strong enough to weather the change.”
"Insurance sector in the UAE is on the verge of witnessing a sustained high growth phase"
He said the announcement of the new regulations to govern the insurance sector that will realign it with international norms and standards is eagerly anticipated. Even as the UAE opens up the insurance sector, international insurers looking to get in will have to measure up to certain benchmarks.
Only those insurers having the backing of an ‘A' rating from an international credit rating agency can expect to get invited to the UAE, he said, adding that some of the big international insurers have made a preliminary check on market conditions in the UAE and will enter the market in the near future, he explained.
He predicted that the insurance sector in the UAE is on the verge of witnessing a sustained high growth phase and efforts are being made to augment the involvement of Emirati youth in this important sector of the economy. "The UAE has the largest number of insurance companies in the AGCC, but has a nationalisation level of only 5.3 per cent.”
Specific business lines such as healthcare, life assurance, construction insurance and Islamic insurance are growing at a rapid pace in the UAE. For an industry listing US$3 companies and over 3,500 employees, that fact that nationals do not represent a significant presence is a serious issue, he said. Sheikh Faisal said that the Emirates Insurance Association will target an Emiratisation level of 15 per cent in the UAE insurance sector by 2010 and in preparation for this goal, it will encourage the addition of at least 500 Emarati youth to be employed in the sector by the end of this year.
News articles about Insurance in UAE
Premium Increases for UAE Drivers
Published January 04, 2013
Dubai roads were obscured with fog and heavy rain on the 17th of December 2012. The hazardous conditions affected drivers and caused as many as 330 motor accidents within a seven hour period.
The havoc caused by the traffic sparked predictions that the insurance industry could see premium rises in car coverage across the UAE at the start of the 2013 renewal season. Current average annual insurance rates for the UAE have been relatively low at 3 percent (0.5-1.5 percent less than other countries within the Gulf Cooperation Council) resulting in many motor portfolios from major insurance providers suffering massive losses, some reaching into millions of dirhams.
Insurance providers in the region have been criticised, with views that keeping the rates low has rendered portfolios ineffective. It is believed that these low cost policies are frequently unable to accommodate sizable claims and are the root cause behind the losses. A single instance of heavy rain and hazardous traffic cannot be blamed, indicating to analysts that rates need to be reevaluated. Muhamood Ahammad of Dubai National Insurance & Reinsurance supported this and stated that a new look at rates was the “change the market needs” and that the problem could not be attributed solely to “accidents on one rainy day.”
Industry estimates that are more realistic have been made suggesting that annual premiums for a vehicle should be between 0.75 and 1.25 percent higher than they currently are. However, the majority of vehicle models above the bracket of US$ 54,450 will likely retain a 3 percent annual rate, as statistics support that drivers in cars under this bracket are more careful on roads and generally keep their cars better maintained. This has worked both as a reward and an incentive to stay eligible for discounted prices.
Back in April 2012, the Dubai Road and Transport Authority introduced a ‘Driver Certificate’ with the intention of providing ‘good’ motorists a method to reduce the costs of their car insurance. These performance certificates were not designed to be used as legal grounds in the application of lower rates, (as they are not mandatory for insurance companies) but to act as an official document that would encourage firms to offer “favourable terms to drivers with clean records,” according to the CEO of the RTA’s licensing agency, Ahmad Hashim Behroozian. Individuals would then be able to produce evidence of their clean records for insurance providers quickly, and would be especially useful for individuals newly applying to insurance companies that would otherwise not have details or motor records to accurately determine premiums.
There are worries that those drivers with no record of accidents or cases of reckless driving will be unfairly affected by the rate adjustments, and whether these performance certificates will successfully offset the estimated 2013 premium increases for drivers clean of traffic violations or black points is yet to be seen. Mustafa Vazayil, managing director at Gargash Insurance stated that insurers who were concerned about underwriting profit would be “left with no choice but to increase the price to realistic levels or at least in line with inflation.”
Health Tourism in UAE Keeps Up
Fresh media reports out of the UAE this week indicate that the region’s burgeoning medical tourism market may be curtailed by ongoing healthcare capacity problems, regulatory issues and other market forces.
The United Arab Emirates is the largest medical tourism market in the Middle East, drawing an estimated 4.3 million people to the country each year for healthcare and wellness services. An article in Dubai-based English language journal, the National, this week asserts that while the private healthcare sector has done a good job in promoting the UAE as an attractive international medical tourism hub so far, the market’s existing medical infrastructure may not be ready to handle a further influx of tourists.
According to the latest industry figures, the usage rate of private sector medical facilities in Abu Dhabi and Dubai by foreign patients has soared in the past three years. Dubai Healthcare City, the region’s largest medical centre, noted that 15 percent of their 502,000 total patients last year were foreign medical tourists, up from 10 percent of 412,000 patients in 2010, and the estimated 5 percent of 231,000 patients in 2009. The City Hospital in Dubai meanwhile told the National that they receive between 10 and 15 medical tourists every month, up from the five a month using their facilities in 2009. The Al Noor Hospital in Abu Dhabi also noted that around 15 percent of its patients came from abroad last year.
When compared to other medical tourism centres in Southeast Asia or Latin America, more patients come and use the UAE’s private medical facilities from neighbouring countries in the Middle East and North Africa. These clients choose to visit the UAE for surgical procedures, such as cardiac or orthopedic treatment, that are not yet available in their home countries. Western-based patients meanwhile, a considerably smaller share of the client base, often seek more elective medical procedures while they are already on their holiday in the UAE. As treatment costs in the UAE are not considerably lower than those in the West, local healthcare firms must focus on quality service, hi-end technology and patient privacy and discretion to remain competitive, a considerable challenge.
While the UAE medical tourism sector has been able to deliver ample progress so far, the Emirates’ current regulatory framework and infrastructure capacity will need revising if the region wants to continue growing and truly compete for more high-value clients on the world stage. Industry analysts have cited a lack of cooperation between state and private sector players as a key impediment to further developing the UAE medical tourism sector. Without a more integrated national approach, the UAE will be unable to either effectively market its prime medical assets abroad or improve upon the number of qualified healthcare professionals working in the system at present.
A lack of specific legislation specifically governing international doctors’ and patient’s rights in the UAE medical tourism sector has often been cited by local healthcare professions as a key area that needs improving. As it stands there are no rules concerning complications, side effects and other liabilities after treatment for overseas patients in the UAE. In countries with more vibrant medical tourism sectors, like Germany and Thailand, there are embedded legal contracts between foreign patients and domestic hospitals that are monitored diligently by independent health authorities. Laws should be introduced that not only cover potential health complications, but also require that local hospitals perform follow-up care on their patients after they return to their home countries, the National argued. Without these necessary protections, the reputation of medical institutions in the UAE and indeed the entire market are at risk of adverse patient health developments.
The premier UAE health bodies, the Ministry of Health (MOH) and Dubai Health Authority (DHA), have both acknowledged in the past that a lack of specific medical tourism legislation may have hindered local industry development. Going forward, UAE authorities have shown an increased interest in heeding local healthcare professionals’ recommendations and will work to lift the UAE medical tourism sector to better international standards. Going forward, the MOH is already looking to set up a special medical visit visa program similar to what is available in the United States and the United Kingdom, which will monitor and protect foreign patients while receiving treatment in the Emirates. Furthermore, the DHA have outlined plans for a set of industry guidelines that would direct the medical tourism market. When they come into effect, these new rules would work to rank facilities by health costs while also providing minimum service standards and additional customer protection.
While updating the local market’s regulatory policy will certainly be welcome, the UAE medical tourism sector must also address several other obstacles to greater international competition, namely a lack of unique specialized healthcare services and significantly lower pricing. The UAE’s youth-leaning and expatriate-dominated population, often cited as a positive in the regions overall economic forecast, works against the private medical tourism industry in particular, according to the National. Because most of the UAE’s sizeable expatriate populace is expected to return to their home country when they retire, the demand for highly specialized medical treatment facilities, which is normally tied to aging populations, remains very low by global standards. Thus, without sufficient business volume in their home market, the UAE private healthcare sector has found it difficult to develop and sustain highly specialized medical services so far. According to the 2011 Economic Intelligence Unit (EIU) report, the UAE is currently spending more than $2 billion each year by sending out local patients to foreign countries for advanced medical treatment. Over 130,000 people from the UAE visited foreign countries for medical treatment last year, including 4,500 where the expenses were covered by the government.
While demand is an issue for high end treatment in the UAE, access remains a problem for other more generalized medical treatment. According to government figures, private and public hospitals are operating at near 80 percent capacity at all times in Dubai. Adequate staffing also remains an issue. The UAE averages about 19 physicians per 10,000 residents, which is low compared to 33 per in the US and 38 in Germany. An upcoming national health insurance mandate could further exacerbate this issue, as more Emirati patients flood the nation’s healthcare services.
On the issue of becoming more cost-effective, the UAE also has much to catch up on, particularly from rival markets in Asia. The average cost of heart bypass surgery in the UAE for example amounts to US$44,000, while the same treatment costs just US$18,500 in Singapore, US$11,000 in Thailand, US$10,000 in India and US$9,000 in Malaysia. Several factors contribute to these cheaper medical expenses, namely the lower cost of living, staff salaries and the greater availability of qualified healthcare professionals. If the UAE can work to address these issues and become more competitive they will surely attract more prospective medical tourists to their country.
As Medical Insurance Premiums Rise in the UAE, Many Local Insurers Turn To Takaful to Remain Competitive
Medical insurance annual premiums are expected to increase by around 10 to 20 percent this year to catch up with rising healthcare costs in the UAE. This annual increase is expected to continue for years to come.
Many factors have contributed to this price hike, including ones caused by insurers, healthcare personnel, impending legislation, and from individual medical insurance policyholders themselves.
One leading reason is that many hospitals and physicians often prescribe treatments that are not always necessary. A healthcare insurance official commented, “It’s fair to say the local health-care industry has not lagged in prescribing all manners of treatments…even when they are not required. They know that if the patient is covered, it’s more or less a given that the insurer would pay up. Most healthcare operators assume that health insurers are there to facilitate their operating cash flows.”
Although the cost of drugs have decreased or been held in place by authorities, local healthcare personnel may not necessarily prescribe these cheaper alternatives. One insurer expressed his opinion about how lower cost drugs do not necessarily translate to savings, “There is definitely a misuse by certain doctors—and the institutions they represent—by prescribing expensive brands even if cheaper generic drugs are available for the same treatment and with the same results.”
However, local hospitals and physicians are not the only ones to blame for rising costs. Many patients with medical insurance often abuse their policies. A significant number of insurance policyholders go to the doctor for the slightest medical concerns. Since many insurers calculate applicants’ and renewing policyholders’ annual premiums based on the community they live in and their age, as more and more people make claims in an area, the overall premium for everyone in that community will also rise. Insurers hope to check this behavior by raising insurance premiums.
Another reason for the increase in premiums, especially for insurers in Dubai, may have to do with the move to make medical insurance mandatory for all employees in Dubai. Although this proposal has been discussed for several years, it seems highly likely that it will happen this year.
Abu Dhabi is currently the only emirate that has a law that mandates health insurance coverage for all employees. Insurers stand to benefit from this legislation if the premium hikes are made before Dubai passes a similar law.
Dubai insurers, especially, need to find a method of managing their portfolios. Without the government subsidies that Abu Dhabi insurance firms enjoy, it is even more difficult for Dubai insurers to make the business profitable.
The increase also comes as a consequence of years of adopting a low-premium strategy by insurers in order to remain competitive and win business. In the past 4 years, while in- and out-patient treatment costs have increased by 30 to 40 percent, annual health insurance premiums have not reflected this trend.
Often, it is not unusual for an insurer to offer the lowest possible rates in order to secure a large group insurance contract. This strategy may have worked in the past, but now it is no longer feasible.
“Medical insurance has never been a highly profitable line in the UAE and in recent years insurers have been feeling the pinch from substantial—and ever growing—claims outgo, so when the time comes for medical policy renewals, insurers have to rationalize their expenses. The proposed increases in premium is a testament to that,” said Abdul Khader Panakkat, the Nasco Karaoglan’s senior director of claims.
Local UAE insurance firms, which already have trouble competing with more experienced and stable international insurers, suffer the most from these price increases. According to the Business Monitor International (BMI) report, local insurers cannot be competitive with multinational giants of the insurance industry outside of the UAE. Instead of trying to compete in conventional insurance, local firms are now looking towards Takaful, a concept of insurance that is compliant with Islamic law.
BMI reported, “These local firms have little economy of scale and limited access to the resources and skills required to be competitive internationally. Where there is more opportunity for growth is in the development of Islamic financial products. Takaful is a particular area where the UAE could lead the way. It will have to battle through structural problems that still exist, however, such as the general lack of popular understanding of Shariah-complaint products and the shortage of suitably qualified Shariah scholars.”
The UAE Takaful insurance sector looks very different from that of the western world. Instead of a few large multinational giants, the UAE Takaful insurance industry is made up of small, local companies that are often listed affiliates of larger firms, and founded by affluent, well-networked families, as many businesses in the region are.
According to data from the Abu Dhabi and Dubai stock exchanges, the Oman Insurance Company (OIC) is currently the largest local insurer, making up 14 percent of total premiums. The next largest is the Abu Dhabi National Insurance Company (Adnic) and the Islamic Arab Insurance Company.
The UAE insurance market is extremely competitive. There are around nine companies that provide Takaful insurance, and over 50 companies offering conventional medical insurance.
How much the premium rate hikes will be remains to be seen, although it depends at least in part on whether there will be changes in legislation. However, it seems likely that this trend will continue for the next few years.
UAE Travel Insurance Sector Expects Growth
There may be boom times ahead for the UAE travel insurance market, as both inbound and outbound tourism numbers begin to rebound after a difficult couple of years. One of the Gulf state’s largest insurance companies has predicted travel insurance sales could now grow by 40 percent in 2012 alone.
Speaking at the Dubai Economic Outlook 2012 presentation on Wednesday, Sheikh Ahmad Bin Saeed Al Maktoum stated that the UAE economy would expect to grow by around 4.5-5 percent this year, and that the Gulf’s tourism and travel sectors would be major contributors to the country’s commercial development going forward. Buoyed by vast oil and gas wealth, the UAE economy had moved at a brisk pace up until the 2008 global financial crisis, when Dubai’s once powerful property and construction sector required a massive US$26 billion government bailout to restructure their considerable debts. This event of course impacted other sectors of the economy as well, with foreign investment and tourism declining in tow.
William Russell to Introduce Broader Medical Options in the UAE
William Russell has announced a new campaign for 2013 that is designed to combat trends of excessive premium inflation in the UAE. The international insurance provider has decided to offer increased flexibility to its clients when they make a choice on their medical network options and prices. Cheaper provider networks will soon be available for clients who are looking for a chance to manage existing claims costs at their own discretion, and based on their needs or situation at the time.
Rising medical costs in the UAE, particularly in regard to medical treatment prices in high end facilities, have resulted in excessive claims costs for patients; a factor considered to be contributing to the region’s escalating rates of premium inflation. The insurance provider hopes this new option for direct billing in the industry will work to control the constant rise in rates. It will also benefit price conscious clients by offering new avenues that avoid “excessively expensive hospitals and clinics,” stated William Russell. Furthermore, the insurer assured existing and future clients that choosing cheaper medical institutions would not affect the level of benefits offered to them, and that the hospitals and clinics suggested would produce “similarly high standards of treatment”.
Sales manager Colin Ward was enthusiastic about the new direction, conveying that William Russell was “thrilled to pioneer this positive new strategy,” and that the new options would allow clients an opportunity to “take control in the on-going effort to contain spiralling costs”. He also commented on how clients choosing their own medical treatment options would facilitate the reduction and impact of medical inflation. Mr Ward went on to declare that if the direct billing strategy was implemented successfully, it would produce immediate and significant savings for clients, and promote a ‘sustainable change’ in the marketplace.
The introduction of broader choices comes after the end of year 2012 decision by William Russell to focus on providing clients easy access of information and details with their new UAE website. Aimed largely at expatriates in the region, the website was launched to “provide straightforward access to details of William Russell’s dedicated Dubai claims team – as well key policy documentation specifically for the UAE region”.
The Middle East has represented a crucial portion of the insurance market in recent years, and the attention William Russell is showing for the region is likely to be shared and replicated across the industry, as both international and local insurers focus on improving support for clients in the area. It is also felt that with this new amount of flexibility for clients, more expensive providers will be encouraged to realign their own costs, hopefully slowing down the overall rate of premium inflation.