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UAE: Health insurance premiums to increase as new mandatory scheme announced

Residents who shoulder the cost of family health premiums may observe adjustments in payment structures

Published: Wed 20 Mar 2024, 6:00 AM

Updated: Wed 20 Mar 2024, 11:47 PM

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Health insurance premiums in the UAE are likely to go up following a surge in demand prompted by the introduction of a new mandatory scheme announced on March 18. Under this scheme, employers must provide insurance to their employees.

Industry executives say that insurers will have to calibrate their offerings to ensure that the pricing remains fair and balanced.

All employers in the UAE must provide and pay for their employees' health insurance from January 1, 2025 – including domestic workers. Employers will have to pay for the health insurance coverage of their employees while issuing or renewing their residency visas.

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"Given the inevitable rise in demand for healthcare services following the scheme's introduction, and considering the normal economic factors like inflation and healthcare advancements, a steady increase in premiums is anticipated," said Avinash Babur, CEO of Insurancemarket.ae.

Avinash Babur

Avinash Babur

"It is incumbent upon insurers to implement a controlled approach to premium adjustments, ensuring that these changes are gradual and communicated transparently to avoid sudden financial strain on both employers and individuals," said Babur.

Anas Mistareehi, founder and CEO of eSanad, said the new healthcare scheme is set to lead to a significant increase in health insurance premiums.

"There is a strong indication that health insurance premiums in the UAE will experience significant growth in 2024 and 2025," he said.

Anas Mistareehi

Anas Mistareehi

According to Mistareehi, this expectation is supported by historical precedents, such as the substantial increase in market size observed in Abu Dhabi in 2007, amounting to nearly Dh10 billion, following the introduction of mandatory medical insurance. Similarly, the mandated medical insurance in Dubai in 2012 resulted in a noteworthy surge, with health insurance premiums rising by almost Dh4 billion. These past experiences suggest a similar trajectory for premium growth in the upcoming years.

Family members insurance

Anas Mistareehi elaborated that for those family members who will be newly enrolled, there might be some initial impact, which will become clearer once clarifications take effect and the law is received.

"Nevertheless, the impact is expected to be minimal, similar to other emirates such as Abu Dhabi, where the employer is responsible for covering the employee, spouse, and up to three children. Therefore, the impact will primarily affect employees with more than three children, and even then, it is minimal."

Babur added that residents who currently shoulder the cost of family health insurance premiums may observe adjustments in premium structures to reflect the new dynamics brought about by the mandatory scheme.

"Insurers will have to calibrate their offerings to ensure that the pricing remains fair and balanced, taking into account the needs of all policyholders to avoid disproportionate impacts on family coverage costs," he added.

Mistareehi added that the launch of the new healthcare scheme will catalyse investments in healthcare infrastructure, enhancing service quality and fostering competition, innovation, and advancements in healthcare on a higher scale.

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