Expatriate Health Plan

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Authorities in the UAE are in the final stages of implementing regulations that will require all non-Emiratis to carry private health insurance. The legislation will soon be passed to the cabinet for final approval. A private insurance requirement has already been implemented in Abu Dhabi, with the Northern Emirates and Dubai set to follow.

"The scheme [...] will be implemented next year," Sheikh Hamdan bin Rashid Al Maktoum, Dubai's deputy-ruler, told local press on October 24.

The ministry of health began revamping the health sector in 2002, with the aim of eventually replacing the old health card system and moving towards a health plan premium policy instead. Prior to this healthcare for all UAE residents was provided by the government. However, with rapid population growth, especially the influx of expatriates who represent nearly 80% of the UAE's population and approximately 90% in the Northern Emirates, the government decided to change the policy in an effort to alleviate the financial burden on the state.

The ministry of health instituted health fees for expatriates using public health facilities, though further modification was necessary to mitigate the high cost to users.

The finalised policy aims to upgrade public health institutions, placing more of the health care sector into private hands. It should especially benefit expatriates, most notably those who work as unskilled labourers and for whom private insurance has thus far been too expensive. Many expatriates living in the UAE are unskilled low-wage workers.

The new legislation aims to create momentum to restructure the health care industry and give a hand to the local economy by privatising service provisions and reducing the burden on the public sector. Insiders have estimated the move will boost growth in the insurance sector by 40%.

In most of the Northern Emirates, both domestic and international companies are active in the insurance market, with local companies representing 67% of the UAE's insurers.

Sharjah in particular is set to see a large benefit, as it is home to 11% of the UAE's insurance market with two locally incorporated insurance companies, Al Buhaira National Insurance Company and Sharjah Insurance. These firms saw revenue growth double from 2002 to 2004 and further expansion in 2005 and 2006. The general insurance sector in the UAE as a whole witnessed a 40% jump in 2005, and is forecast to see another quick rise following the implementation of the new legislation. Some industry players expect 15-20% annual growth in the next five years.

This year Abu Dhabi became the first emirate in the UAE to successfully introduce a mandatory health insurance policy for expatriates. The Northern Emirates and Dubai are using Abu Dhabi's insurance scheme as a model for their respective strategies; however, there are some concerns about how the insurance policy will be interpreted and implemented.

In Abu Dhabi, local provider Daman runs the expatriate insurance plan, receiving subsidies from the state, and its revenues have grown nearly 17% in the last year. Authorities in the Northern Emirates have expressed concern that the local markets and private insurers may face a similar single-company model, creating a monopoly situation, especially if such a company, like Daman, offers low-cost insurance and is subsidised.

Local insurers have also highlighted concerns over the potential for healthcare providers to hike up prices on the back of the new insurance regulations and an abrupt rise in claims. While the new regulations offer considerable opportunity, how they are implemented will have a large part to play in their long-term success.

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