The future of medical insurance inflation in Dubai
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The future of medical insurance inflation in Dubai

This article looks at the findings generated from the Dubai section of our global partner’s latest IPMI report to present an overview of medical insurance inflation in this region.

As mentioned in our recent blog post, our global partner Pacific Prime has released their latest report on International Private Medical Insurance (IPMI) inflation. Titled: International Private Medical Insurance Inflation - 2017, the report looks at medical insurance inflation in the world’s top 10 locations for IPMI, and utilized our extensive knowledge in the UAE region to further include key insights on the future of medical insurance inflation in Dubai.

An overview of the regulatory landscape in Dubai

As you are most likely aware, from June 2016 onwards all Dubai residents and expats must have private health insurance that meets the minimum level of cover as set out by the Dubai Health Authority (DHA), including mandatory maternity coverage and full coverage for pre-existing conditions. For expats moving to Dubai, this law also requires proof of health insurance for anyone seeking entry into the country, as failure to do so will likely result in denied entry.

The implementation of mandatory health insurance is not unique to Dubai. For example, Abu Dhabi has already enacted compulsory health insurance five years ago. Many countries in the Middle East are also changing the ways in which medical treatment is funded. For example, Kuwait and Qatar are in the process of setting up a compulsory health insurance system, and Bahrain has introduced a scheme at the beginning of 2015 which requires private companies to pay a fee for each employee to access medical treatment.

The implementation of mandatory health insurance law has several implications on the future of IPMI inflation in Dubai, these are discussed below.

The future of IPMI inflation in Dubai

The 2017 IPMI inflation report has revealed that global medical insurance inflation in 2016 was 9.2%. Historically, IPMI inflation in Dubai has closely tracked along the global IPMI inflation rate and we believe that this held true for 2016, however we do not have reliable inflation data for Dubai due to the final implementation of mandatory health insurance law rolled out in June last year.

This has meant that insurers were required to implement new DHA compliant plans in 2016, and 4 of the providers we included in the 2015 IPMI report no longer offer plans in Dubai. These include: Aetna International (InterGlobal), Allianz Worldwide Care, AXA PPP Healthcare, and Cigna Global. New compliant plans have been introduced in 2016, but these are different from those included in the preceding reports so it would not be viable to compare them to the plans offered in previous years.

So, what is the impact of mandatory health insurance law on the future of medical insurance inflation in Dubai? As of November 2016, it has been estimated that 3.5 million people had become insured over the past year - that’s 88% of the target population in Dubai! Pacific Prime predicts that these significant regulatory changes are certainly going to have a large impact on IPMI inflation moving forward, due to the following factors:

A large increase in the number of people seeking care

With a greater number of people insured, we expect that there will be more people demanding and utilizing healthcare. This trend was witnessed in Abu Dhabi when the country implemented a similar health insurance scheme, which resulted in a 40% near immediate increase in hospital visits. With a greater number of claims being submitted and an increased strain on the healthcare system, we expect that the cost of healthcare will hike upwards, causing medical insurance premiums to inflate.

The greater number of insured providing actuarial opportunities and risks

With a greater number of people insured, insurers will certainly receive a lot more big data opportunities. At the moment, actuaries determining prices on current insurance plans have worked this out with little historical information on how exactly residents in Dubai will be accessing healthcare under the new DHA reform. Pacific Prime believes that it will take several years before prices on plans become more stable as actuaries build enough information on the new market.

To uncover further insights on IPMI inflation in Dubai, be sure to download the latest report or view the online version of the report here. If you’d like to have a chat with our insurance experts, feel free to contact us today.


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