The Dubai Health Authority’s expected rules on premium pricing will provide more stability to the Dubai healthcare insurance market and control the increase of the cost of healthcare services. Ms Salma Achour Khouaja of Holman Fenwick Willan Middle East says the regulations will prevent premium “price wars”.
A recent report on the cost of international health insurance by Pacific Prime said that Dubai ranked sixth globally in the average cost of international health insurance plans and demographics, a jump of eight places over the 2015 ranking.
Two major factors contributed to this cost increase: the introduction of mandatory health insurance by the Dubai Health Authority (DHA) at the beginning of 2017 which led to an increase in claims and subsequently the cost of health insurance; and Dubai’s large expat population which has resulted in a greater demand for international health insurance, with a significant breadth of cover increasing the cost of international health insurance. The average cost of international health insurance for all plans and demographics in Dubai was US$8,038 in 2015 and $10,213 in 2016, an increase of 27% in just one year.
Premium pricing
How will the DHA arrest such increases of medical costs? At present, there are no restrictions on health insurance premiums in the UAE. However, the DHA will be issuing rules on premium pricing which will apply in 2017-2018. The main objectives of the premium pricing regulations will be two-fold: to provide more stability to the Dubai healthcare insurance market and to control the increase of the cost of healthcare services. The regulations will prevent premium “price wars”, protect the insured from unreasonable increases of premiums by insurers and provide protection and stability to insurers.
We expect medical providers such as hospitals, clinics and polyclinics will have to apply to the DHA if they wish to increase the prices that they intend to charge insurers. The DHA will evaluate the requests based on the rate of increase of the cost of the healthcare services, the quality of the services provided and the performance of the medical providers. We believe that the DHA will only fix the maximum percentage that prices can be increased by the medical providers, which means setting a cap and percentage increases, and will not mandate any price list for the healthcare services.
As the Pacific Prime report stated: “Regulation of the private healthcare industry is always a tricky subject, but we believe that the DHA’s regulations are a large step in the right direction and will inevitably result in a number of positive outcomes, including: ore realistic tariff increases for customers; ore controlled medical inflation in the region; ore reasonable future premium increases for insurance; and a competitive market between providers with a more ‘fair’ and competitive environment.”
Direct impact
The DHA’s mandatory health insurance cover, which has increased the number of insureds and the number of claims, along with the increased implementation of healthcare and health insurance regulations, will have a direct impact on the cost of health insurance premium rates. For example, “all plans secured in Dubai must also cover maternity and pre-existing conditions”.
While the mandatory nature of the new healthcare regime is to be welcomed, what remains to be seen is how the regulatory environment will impact insurers, medical providers and insureds. M
Ms Salma Achour Khouaja is Associate at Holman Fenwick Willan Middle East LLP.