What the insurance law means for Oman’s health sector

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Following the success of compulsory medical insurance policies in other Gulf states, Oman has initiated the rollout of its own national mandate.

The Unified Health Insurance Policy (UHIP), also known as Dhamani, was unveiled in late March. The policy is expected to grant up to 2m private sector workers and their dependents access to health care, and its phase-in is scheduled to begin later this year.

Omani nationals and expatriates working in the private sector, as well as non-working visitors, are required to obtain health insurance through a limited number of providers authorised by the Capital Markets Authority (CMA). In turn, those providers will be obliged to extend coverage to the dependants of the policyholders.

The UHIP requires that businesses pay their employees’ insurance premiums and stipulates a minimum set of essential benefits that must be covered, including in- and outpatient services, emergency care, doctors’ fees, diagnostic services, medicines and ambulances. The scheme will fund up to OR3000 ($7791) for inpatient services and up to OMR500 ($1299) for outpatient services, including scans, lab tests and pharmacy fees.

The policy, however, will not include treatment of pre-existing conditions, injuries incurred outside the workplace, alcohol or drug abuse, sexually transmitted diseases or the use of alternative medicines, while services related to pregnancy, childbirth, dentistry and eye care will be up for negotiation between individual employers and their employees.

The UHIP will be introduced in stages, according to the scale and preparedness of the employers responsible for providing coverage, and eventually be extended to encompass smaller firms and domestic workers.

“The implementation will take place gradually through 2019 and 2020, starting with international companies and big local companies,” Abdullah Salim Al Salmi, executive president of the CMA, told OBG.

In late April the CMA announced a tender to create an electronic platform that enables online health insurance transactions between insurance companies, health care providers, third-party administrators and regulators. The platform is to make the implementation of the UHIP more efficient for all parties by allowing funds transfers, approval requests, insurance coverage verification and the storage of data.

See also: The Report – Oman 2019

Insuring sustainable growth

The new mandatory health insurance scheme is expected to deepen positive trends in the insurance market by boosting premium growth and increasing investor appeal in the sultanate and abroad.

According to Rajesh Venkiteswaran, senior vice-president of Vision Asset Management Company, the Omani insurance market is becoming increasingly attractive to underwriters. Growth associated with the UHIP will help to shore up and diversify the sector’s revenues, which have long been driven by motor and life policies.

“The cost of health care is going up and so is the level of private participation in the sector,” Venkiteswaran told OBG. “The government wants to move away from being a major health care provider.”

This move to partially privatise the supply of health insurance will create considerable opportunities for the companies included on the CMA’s list of approved underwriters – which has not yet been disclosed – as well as for on- and offshore reinsurers who can cover the domestic market.

The policy announcement follows a recent record of growth in the health segment. Measured in terms of premiums, the share of health insurance in the overall underwriting mix rose to 33% in 2018, up from 26% in 2016, which the CMA attributes to a growing awareness of the importance of health insurance in lowering the costs of injury and illness. More broadly, Oman’s non-life segment has performed positively in recent years, with premiums expanding at a compound annual growth rate of 11.4% between 2011 and 2016.

Other metrics indicate that there remains significant room for providers to expand their portfolios. According to an estimate from Omani investment bank Ubhar Capital, the domestic insurance penetration rate – a measurement of total underwritten premiums as a share of GDP – was 1.6% in 2017, well below both the GCC average of 2.3% and the global average of 6.2%. Moreover, there were as many as 1.8m foreigners in Oman who did not have medical insurance in 2017.

The low rate of policy uptake has preserved a large pool of potential clients, which the health insurance mandate could help insurers to access by driving new demand.

“The new regulations will create many opportunities, and now there is momentum for insurance companies,” Navin Kumar, CEO of Oman Qatar Insurance Company, told OBG. “Currently, approximately 450,000 people have health insurance, but after the implementation of the new insurance scheme, this is expected to grow to 2.1m people.”

Rising demand to spur greater spending in the health sector

The UHIP is also expected to have flow-on effects for the country’s wider health care market.

Rising demand for high-quality and specialist services has already prompted new investments in private services. Furthermore, the impending reform towards partial privatisation is expected to increase capitalisation and spur greater spending in the segment.

This growth potential may entice foreign underwriters and medical service providers into the market, which the CMA predicts will create new employment opportunities in both spaces. However, increased competition for personnel could fuel wage inflation unless measures are taken to expand the pool of medical service providers and trained insurance workers.

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