Premium rates for health insurance are likely to increase going forward, according to industry players.
This will contrast with the picture over the last two to three years during which health insurance premiums in the UAE have been more or less stable. And where there have been increases, these have been confined to a narrow range, reported Gulf News.
To add to insurers’ woes, many employers have cut down on the health cover for their workforce during yearly renewals of health insurance policies.
Mr Mark Adams, chairman of The Healthcare Network said, “The health insurance sector in the UAE is under real pressure – insurers either have to find ways to lower claims or they have to increase premiums. The whole situation is made worse because of an unsustainable oversupply.
“We have too many insurance brokers, too many insurers or TPAs and too many healthcare providers. We are still opening new hospitals when there is already an oversupply and this means we have fundamental inefficiency.
“The healthcare sector needs to consolidate and insurers need to channel their volume to fewer operators.”
He added that in giving selected healthcare centres more business, insurers must also insist the centres stop taking referral fees for diagnostics and that they prescribe generic medications.
Healthcare operators have their own concerns over their dealings with insurers to process and release payments due to them. Some of these payment cycles are getting stretched to a breaking point, making it harder for hospitals and clinics to manage their cash flow.
“The payment cycles are getting longer only with a select few, small insurance companies. [Our] concern is their ability to pay the outstanding amounts. In Abu Dhabi, the standard provider contract is working well. Similar contracts, if introduced in Dubai and Northern Emirates, may expedite the settlements,” said Mr Prasanth Manghat, CEO and executive director of NMC Health.
Currently, Dubai and Abu Dhabi require mandatory health insurance for all its residents.
Mr Graham Coutts, a director in the insurance team at Fitch Ratings said, “Competition remains intense in the UAE health insurance sector. The recent regulatory changes, which made health insurance compulsory, were an incentive for new players to enter the market, which increased competition and eroded profit margins.
“The health insurance sector did remain profitable in 2017. (But) Fitch expects rising claims costs due to the introduction of VAT to put an additional strain on profitability. Insurers may struggle to pass on the full cost of these increases to policyholders due to intense competition for top-line growth.”
Mr Adams believes that it may be time for insurers to raise their policy rates. “With carriers offering mandatory health insurance set at low fixed rates – and administration fees, regulatory fees, broker commissions further reducing the actual claim fund – it is easy to see that current rates of premium are not sustainable,” he added. “Some insurers are paying claims six months after they were submitted.” M