Protecting Workers

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Though the emirate of Abu Dhabi already has the most highly capitalised insurance companies in the UAE, insurers will soon receive a major boost in business thanks to a new law that is to come into force next month.

In Abu Dhabi, employers of more than 1000 workers will be legally obliged to provide private basic insurance coverage to their employees, their spouses and up to three children under the age of 18 as of July 1.

The announcement came from Abu Dhabi's General Authority of Health Services (GAHS) at a press conference held on June 10. The new Code of Regulations of the Health Insurance Policy, also known as Law 23, was approved in late 2005 by the President of the UAE and Ruler of Abu Dhabi Sheikh Khalifa bin Zayed Al Nahyan. The ruler said that Law 23 is to promote "accessible, affordable and high-quality health services for all residents in Abu Dhabi".

The new law is expected to benefit over 1m expatriate residents, nationals and their dependents. Many of the expatriates send much of their earnings back to their families in their country of origin, so the free health coverage will be particularly welcomed by the emirate's labourers.

When discussing the new law, the general manager of GAHS, Ahmed Mubarak al-Mazroui said, "The Abu Dhabi government aims to provide its citizens with the highest standard of living, including the provision of world-class healthcare services for residents and nationals alike."

It could also be a move to help offset the rise in the cost of living in the emirate as it develops and attracts more investors.

Indeed, most employees are eagerly welcoming the new law. The policy will replace the existing law and the national health card held by all residents. However, those employers already providing private insurance for their employers will not be required to nullify such agreements if they are as good as or better than the required insurance under the new law. The new policy will have to be obtained by the employee/employer prior to visa renewal.

Insured persons can also easily shift from one policy to another, which will boost competition among private insurance providers in the emirate. As of 2005, there were 23 local and 22 foreign providers in the UAE.

Those with chronic diseases, such as diabetes or cardiac disorders will only be covered if the patient has been a resident of the UAE for a period of not less than six months.

The law will have a two-phase implementation beginning July 1 followed by January 1, 2007. As of January, firms employing less than 1000 workers will also be required to provide healthcare coverage.

Al-Mezroui also emphasised the fact that employers and sponsors will be liable to cover the costs of staff without an authorised health insurance policy approved by GAHS. If employers pass the cost of insurance to staff, they will be considered in violation of Law 23, investigated and face penalties.

The GAHS and Executive Council of Abu Dhabi have set the premium of the basic product policy at Dh600 ($163.35). This price will be set for each of the insured in accordance with the duration of the policy-holder's stay and current market prices. The prices of healthcare products and services will be controlled and supervised by GAHS, and will be published in local newspapers.

The UAE insurance market is already worth more than $1bn annually and continues to grow rapidly. According to a report by the IMF, the major local and foreign insurers are "sound and well capitalised". As work is underway to enhance regulation of the industry, which is watched over by the Insurance Companies Division of the UAE's Ministry of Economy and Planning, local insurers will be recognised as on par with other multinational insurance firms. In 2004 the government passed a directive demanding full transparency in all insurance sector transactions.

The new insurance programme will be enforced by GAHS, a new Complaints Unit and authorised officials reporting to the Ministry of Justice.

The only companies that can be exempted from the law are those that prove to the government that they have their own medical facilities, which must be maintained to the highest standard as set out by the Code of Regulations. Such companies will be audited by the GAHS and not required to provide health insurance to employees.

All of this is in line with Abu Dhabi's efforts to both improve conditions for its foreign workers from all walks of life, while at the same time liberalising the local economy and making it more attractive to investors in various economic sectors. While many companies, such as Etihad Airlines and national telecoms service provider Etisalat remain government-controlled, other sectors, such as insurance, are leading the country's drive towards market liberalisation.

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