A common theme throughout the GCC’s insurance markets is the gradual shift towards compulsory private health care. The issue has been on the agenda of regulators for years, and the sustained period of low oil prices which began in late 2014 has strengthened the desire of governments to shift some of the burden of health care provision to the private sector.
By the close of 2016 these efforts were at various stages of completion, with both Oman and Bahrain in the final stages of approving legislation that will introduce mandatory health insurance, and Qatar cancelling plans for a mandatory single-provider national health care scheme in favour of shifting the National Health Insurance Company’s client list to leading private insurers. Saudi Arabia was in the final stages of implementing a mandatory scheme for private sector employees, while in the UAE, Dubai was in the last stage of rolling out compulsory cover for expatriates, and in Abu Dhabi private health insurance was already mandatory.
Despite differences in approach, the expatriate community has been the starting point for most of the schemes. While Kuwait has yet to reveal comprehensive details regarding its mandatory health care strategy, information revealed by the Ministry of Health (MoH) in 2016 suggests that it will follow a similar pattern.
Currently, expatriate workers in Kuwait are required to pay an annual fee of KD50 ($165) for access to health care at public hospitals and clinics. However, the proposed plan requires foreign visitors and workers to secure health insurance policies from local insurers. Subscribers to the scheme will be granted access to three special expatriate-only hospitals and a further 15 expatriate-only health care clinics. Kuwaiti citizens and other GCC nationals, will continue to receive treatment free of charge from public hospitals.
Both the implementation schedule and finer details of the proposal had yet to be revealed at time of press. Schemes in the region that will be of great interest to the industry over the short term are issues such as cost-sharing provisions – widely seen as a useful means to limit abuse of the system – and the number of local insurance companies that will be allowed to participate. One determining factor is likely to be the MoH’s ability to provide the expatriate-only health care infrastructure called for by the plan. The Health Assurance Hospitals Company, a public shareholding firm that was established to provide medical care for expatriates through three hospitals, has stated that it expects its facilities to be officially operational by 2019, while some of the larger expatriate-only clinics may be open as early as 2017.
The central concern for all is cost. The MoH estimates that the annual premium coverage for the new system will be around KD130 ($430) per person, a considerable increase on the flat fee paid by expatriates currently. As with other mechanisms in the region, employers are likely to be asked to meet the bulk of this burden. The standard approach is to begin with the larger companies, such as those with a payroll of more than 1000 employees, before extending the scheme to smaller firms, whose sensitivity to cost increases will make this the most difficult phase.
For those insurers taking part, the new scheme will mean an increase in their gross premiums each year. However, the more interesting question concerns sustainability. Kuwait’s crowded insurance market is fiercely competitive, and in other segments insurers have shown a willingness to lower premiums at the cost of their technical performance.
An increase in gross premiums will not automatically translate into an increase in net profit if insurance companies compete for market share by offering services below cost. If the government is to provide a robust health care framework for its expatriate workforce, monitoring the claims ratio of private health care coverage and ensuring sound underwriting practice will be of the utmost importance. Without a dedicated insurance regulator in place, this task will be a challenging one.