Insurers in Dubai will face additional pressures on their bottom lines stemming from their medical book, said AM Best in its latest GCC market segment report. Although most medical policies across the country exclude pandemics, the Dubai Health Authority (DHA) is requiring local insurers to pay for claims arising from the COVID-19 pandemic.
Earlier in January, a circular sent to all health facilities licensed by the DHA stated that based on the directives from the Ministry of Health and Prevention, all suspected or confirmed cases of COVID-19 must be considered as emergency cases. Hence, patients who are insured will have their claims honoured while uninsured patients will get free treatment.
AM Best noted that the number of cases in Dubai has been manageable to date and insurers are expected to be able to absorb these losses. However, if there is a material increase in the number of cases, the corresponding increase in claims will negatively affect insurers’ profitability, particularly if reinsurers are not contractually obligated to cover these losses, said AM Best.
Premium growth was expected to be modest in 2020, due to downward pressure on pricing in a highly competitive market. In light of the pandemic, premium is expected to contract by 6.1%, against a growth of 5.3% in 2019, according to AM Best.