UAE mandates health insurance for private sector: Will premiums drop?
UAE requires all private sector employers to offer schemes from January 2025
Dubai: In a significant move, the UAE has implemented a nationwide mandate requiring private sector employers to provide health insurance coverage to employees and domestic workers who currently lack such benefits. The decision will be enforced mandatorily starting January 1, 2025.
According to experts in the insurance sector, this presents numerous advantages for all involved parties. For employees, it ensures guaranteed coverage; for insurance companies, it translates to increased revenues, and their risk pools will expand; and for the healthcare sector, it offers an incentive to enhance healthcare infrastructure nationwide.
Only Dubai and Abu Dhabi governments previously made health insurance mandatory for private-sector employees.
“Premiums may rise initially, especially in Sharjah due to its large population and associated cost of living, but should stabilise over time once businesses adjust to this new operational expense,” an insurance broker told Gulf News.
Larger risk pool
Furthermore, with Dubai’s population projected to reach 5.8 million by 2040 from the current 3.5 million and the UAE’s overall population expected to reach 11.1 million, insurers’ risk pools are set to expand.
“This expansion will include newly arriving residents who need insurance under the new mandate. This broader risk distribution may lead to more stable or even reduced premiums as the risk is spread across a larger population base,” said Vijay Valecha, Chief Investment Officer of Century Finance.
A more significant risk pool should ideally mean a lower premium. “Theoretically, the decision to make insurance mandatory for all private sector employees should reduce premiums. However, insurance company prices are based on prices of hospitals and doctors,” said Ramzi Ghurani, Managing Partner at Petra Insurance. He said, “Unless that’s controlled, premiums may remain the same.”
Theoretically, the decision to make insurance mandatory for all private sector employees should reduce premiums. However, insurance company prices are based on prices of hospitals and doctors
More competitive
Also, given the increased influx of new customers, an increase in competition can be expected in the insurance market, which may intensify the competition among insurers.
“In a competitive market, insurers may strive to attract and retain customers by offering competitive premiums and enhanced benefits,” said Valecha.
Sijo C Mathews, Vice President of NewAge Insurance Brokers, said, “I am not sure how it can impact the premiums, but on an optimistic note, it might become marginally cheaper because the base is becoming higher, and the entire population is being covered.”
Mathews also said, “This law is going to ease the stress and worry of the financial burden that may occur due to medical expenses. In my 14 years as an insurance advisor in UAE, this has been expressed as a major concern in people’s minds.”
“In the case of domestic workers, employers have to foot the bill of the scheme. The Ministry of Human Resources and Emiratisation (MoHRE) will be responsible for carrying out essential awareness campaigns and programs regarding this concern.”
This marks the second mandatory insurance scheme introduced for employees in the UAE, following last year’s requirement for workers to subscribe to a program safeguarding them from job loss.
Tariq Qaqish, CEO of Salt Fund Placement, said: “The positive move is not just about providing healthcare security; it’s a strategic move for workforce stability. This shift promises to fuel long-term economic growth by ensuring workers are well-cared for.
“This policy isn’t just good for workers; it’s beneficial for businesses too. Offering health insurance stabilises the workforce, reducing turnover. Businesses will benefit from a more reliable workforce, lower unexpected costs, and smoother operations. Moreover, this move signals a broader commitment to improving quality of life and worker satisfaction across the UAE.”
This policy isn’t just good for workers; it’s beneficial for businesses too. Offering health insurance stabilises the workforce, reducing turnover
What about healthcare providers?
Meanwhile, another insurance provider said the unification of health services is crucial for the industry, addressing anti-selection issues. The broker said, “It would also improve healthcare quality, promote preventative measures, and attract medical investments. It would also result in the expansion of medical services in other Emirates like Al Ain and Ajman and increase job creation.”