While the large investments in infrastructure anticipated over the coming years represent the most significant growth driver for the insurance industry, changes in the way that Qataris access health care are also expected to have a large impact on the sector. In April 2014 the National Health Insurance Scheme, known as Seha, was extended to all citizens. This development is the most recent milestone in a process that will see Qatar move from a system of free and subsidised health care for nationals and expatriates to one in which the government will pay for the health care for nationals, while employers (or sponsors) are required to cover premiums for foreigners. Qataris will be automatically enrolled in Seha, using their Qatari identification, and rather than be confined to receiving care from state institutions, they can choose from an expanding list of public and private hospitals and clinics.
HEALTH TRANSFORMATION: The transformation of Qatar’s health care system is a potential boon for the insurance industry, as the experience of other Gulf nations has shown. The Qatar Financial Centre Authority’s director of strategic development, Akshay Randeva, told the local press, “In Saudi Arabia, where such a scheme was established in 2008 for all private sector employees, the health segment now accounts for more than 50% of the entire insurance market. The country’s insurance penetration has increased from 0.4% to 0.8% over the same period of time. The UAE has also seen non-life insurance penetration increase from 1.3% to 1.6%, which is partially attributable to mandatory health schemes in some emirates.”
However, the implementation of the scheme is in its early stages, and in the near term insurers face several challenges. The most salient of these is the fact that under the new law only the National Health Insurance Company is permitted to provide the Seha plan, with commercial insurers restricted to providing top-up cover for enhanced services. While insurers have lobbied to be allowed to offer the compulsory plan, in the short to medium term at least, growing their business in this area will require them to identify gaps in Seha provision and establish coverage plans that fill them.
This has prompted complaints from private insurers about their short-term prospects, as they are likely to lose out on business due to the greater penetration and coverage offered by Seha. Indeed commercial insurers will have to contend with current customers re-evaluating their coverage: under the new system many employers will find themselves operating two insurance policies – the compulsory Seha plan and a separate, less-comprehensive policy from a commercial player that will provide the additional coverage needed to match the benefits previously granted to their employees. This is especially likely to be the case for expats, as their Seha coverage may be less comprehensive.
GAPS: The principal question for insurers, therefore, is: where are the gaps in the Seha plan that can be covered? As far as citizens are concerned, the coverage offered by Seha is extensive, granting them access to over 190 medical facilities. Although there have been concerns about capacity and growing findings of abuse after its initial implementation, nationals will have an ever-greater choice of facilities at which to access inpatient and outpatient services as new providers are added to the approved list. The breadth of the Seha plan appears to leave little scope for commercial insurers, a reflection of the fact that Seha is essentially a social scheme, not an exercise in profitability.
However, after a recent delay, Seha hopes to extend coverage to expatriates in 2016. As the scope of services offered is expected to be smaller than that offered to nationals, commercial insurers may be able to market top-up plans to this segment more easily. Given that Qatar’s expatriates make up more than 80% of the total population, the potential for premium growth is considerable. Further, Seha does not provide coverage to Qataris travelling abroad – a notable gap given the popularity of overseas holidays. While questions over implementation remain, commercial insurers have the potential to make the best of the move in the long run.