The UAE's health insurance sector is undergoing rapid change, marked by steep premium hikes, increased utilisation, and a shift away from traditional pricing structures, according to Pacific Prime, a global health insurance brokerage, and risk management and employee benefits specialist.
In its report “State of Health Insurance Report in 2025”, Pacific Prime said that as Dubai continues to lead the region, insurers are recalibrating their models to address persistent overuse, rising costs, and growing consumer expectations.
Key drivers of rising healthcare costs
Premiums across the UAE have seen sustained and substantial increases, particularly over the past two years, with hikes ranging from 12% to as much as 30% or more for individual and family plans. These steep rises reflect a convergence of cost pressures:
Some of the largest international insurers implemented unprecedented premium increases in 2024, driven by medical inflation compounded by persistent over-utilisation and aggressive healthcare provider marketing, said Mr David Hayes, CEO, Pacific Prime Dubai, in comments published in the report.
Market trends: Price volatility and evolving risk assessment
To cope with growing claims and operational complexity, insurers are adjusting their underwriting strategies and becoming stricter on handling undisclosed conditions. Providers and telemedicine platforms are aggressively marketing their services, adding to the strain on claims. There is also a growing push to limit outpatient direct billing for low-cost visits in order to encourage more responsible healthcare utilisation.
Dubai’s market growth and regulatory environment
Dubai remains the centrepiece of the UAE’s health insurance market, supported by the Insurance System for Advancing Healthcare in Dubai (ISAHD) mandatory scheme, which covers over 98% of residents. This has helped reduce out-of-pocket spending from 18% in 2015 to about 13% in 2023, but has increased cost burdens on insurers and employers. The market was valued at $9.34bn in 2025 and is projected to reach $13.60bn by 2030, with a CAGR of over 7.80%.
Expanding mental health coverage
Mental health benefits are now mandated within basic health insurance plans and represent one of the fastest-growing areas of insurance utilisation in the UAE. Insurers are responding by expanding mental health coverage, although caps on visits and certain restrictions remain.
Outlook
As pressures on pricing and utilisation mount, the UAE’s insurance market is shifting toward more sustainable models. The report said, “Expect more granular underwriting, stricter claims management, regulatory reforms around outpatient billing, and expanded telehealth services. Balancing affordability, access, and cost control will define the next phase of market maturity.”