New regulations set to come into force in Dubai could leave individuals, employers and brokers exposed to potential fines if they fail to comply with the new rules, as Sam Barrett reports
With the third and final phase of Dubai’s mandatory health insurance legislation set to be completed by as this article goes to press, anyone wishing to live or work in the emirate must have a minimum level of cover in place. And, with fines in place for those who don’t comply, plus the risk of not even getting through immigration, understanding the new requirements is essential.
Although the region is well-known for its sudden changes of legislation around health insurance requirements, Marco Bannerman, executive director – distribution, MEA at Aetna International, says these changes have been handled well.
“It is complex and there are some challenges but it’s been very well communicated,” he says. “There may still be a mad scramble to get cover but the Dubai Health Authority [DHA] has provided regular circulars and briefing sessions to help everyone understand the changes. It should be front of mind for all brokers, insurers and employers.”
Regulatory roll-out
Helping to ensure compliance, there’s also been a much longer run up to the introduction of the new requirements. Although the legislation came into effect at the beginning of 2014, it’s been rolled out in a very similar way to pensions auto-enrolment in the UK.
Focusing initially on large corporates, companies with more than 1,000 employees were required to have coverage in place by the end of October 2014. The second phase, for companies with between 100 and 1,000 employees, was completed at the end of July 2015, leaving all other employers until the end of June 2016 to comply with the legislation.
While some SMEs are likely to leave their cover arrangements to the last minute, David Hilton, international account manager at Jelf International, says employers should see it as opportunity rather than a cost.
“Employers who haven’t offered medical insurance in the past can promote it as new benefit to staff. It’s all down to the marketing,” Hilton says.
This final phase also includes dependants and domestics. Arranging cover for these is the responsibility of the individual employee, although many expect employers to pick up cover for dependants on an expatriate assignment.
But, with signs that some would miss the end of deadline, the DHA announced a six month grace period at the beginning of the month.
Bannerman explains: “The deadline hasn’t changed to cover domestics but the health authority has confirmed that, during this six month grace period, it won’t issue fines where cover isn’t in place. It is also encouraging insurance companies to have stands in shopping malls to make it easy to take out cover.”
Cover requirements
The Dubai legislation stipulates a minimum level of cover. This is relatively basic, giving the insured a maximum claims limit of 150,000AED (£30,000) and insurers have had to adapt their plans to ensure they are compliant.
“It has meant adding in new benefits and modifying existing cover but all the plans we offer in the region are now fully compliant,” says Claudine Audin, international sales and account manager at Aviva Health.
Part of the problem is that the mandatory cover features a number of non-standard benefits including pre-existing conditions and maternity services.
“The rules stipulate that insurers must provide maternity benefits to married females of child-bearing capacity,” says Audin. “We’ve interpreted this as married women between the ages of 16 and 50. We’re happy to provide maternity benefits to unmarried women too but they need to be aware they would have to have the baby outside of the UAE.”
Another feature that is out of step with a standard international medical insurance scheme is co-insurance. The basic package includes a 20% co-insurance, capped at 500AED (£100) per incident and 1000AED (£200) a year.
But, while this is a feature of the basic cover, the international insurers won’t need to include co-insurance on their plans.
“Although we’ve adapted our plans so they meet the minimum requirements we will still offer a higher level of cover,” says Kevin Melton, sales and marketing director at AXA PPP International. “The minimum levels won’t really satisfy expatriates who are used to richer benefits.”
Cost considerations
For those happy to go for the minimum level of cover, the compulsory nature of health insurance means premiums are relatively low. Cover costs around 500AED a year, equivalent to just under £100.
Audin adds: “The DHA has said it wants to control premiums to ensure healthcare remains affordable so we will have to report details of our pricing. It will be interesting to see how this affects pricing going forward.”
The other aspect of making insurance compulsory is that it won’t be possible for an insurer to exclude or decline someone. This will mean insurers will have to pick up risks even where a claim is a certainty, for example a pregnant woman or someone with a condition that requires treatment.
Insurers will be able to load premiums but Melton says this will be carefully controlled.
“There’s no precedent on this and I’m not sure where the DHA will take it,” he adds. “Although it has stated that it will be reviewing insurers who repeatedly load premiums.”
Whether the DHA’s watch keeps a hold on premiums or the additional risk associated with pre-existing conditions means there is uncertainty about the profitability of this market, Sarah Dennis, head of international at The Health Insurance Group, believes it could become an expensive region.
“The insurers will need to keep a handle on managing costs,” she says. “If it becomes too expensive, it may be necessary to take the local option then top-up with cover they can use in other countries.”
Compliance challenges
Insurers and brokers wanting to be part of the market have had to meet strict requirements. For insurers this has meant either obtaining a licence in the region or working with a fronting partner. As examples, Aviva is working with Emirates Insurance Company as its fronting partner; AXA with its sister company AXA Gulf and Bupa Global with Oman Insurance Company.
Advice is strictly regulated too, according to AXA PPP International’s Melton explains.
“Advice and sales must be done by a locally admitted company,” he says. “For a broker this might mean having an office in the region or working with a partner. UK based brokers also need to think about how they are remunerated for this business as there are rules in place regarding commission.”
The DHA also requires insurers to register their products to ensure they meet its minimum standards. Further, with health insurance linked to visa issuance and renewal, the DHA requires every individual’s details to be registered on its portal so it can check they have cover.
The data collection required for this is a key challenge for insurers and brokers.
“The amount of data we need to collect and upload onto the DHA website is significant,” says Bannerman. “Although it has tried to simplify this with dropdown menus and so on, there are still 23 different fields for each member. It will be essential that employers and brokers work together on this.”
As well as being required for a visa, the provision of this data is also linked to a health insurance card. Under the new rules, everyone must carry one of these and notify the DHA immediately if it is lost or stolen. Dennis says that although this may seem a hassle, it will bring benefits.
“This helps to reduce the risk of fraud and abuse of the healthcare systems,” she says. “It’s a fair way to police it.”
The compulsory nature of cover means there is also a table of fines in place for anyone who doesn’t keep to the rules. Applying to all parties – employers, individuals, insurers and advisers – there are 56 violations that warrant a fine with penalties ranging from 500AED (£100) for failing to notify the loss of or damage to the health insurance card to 150,000AED (£28,500) where an insurer does not advertise the cancellation of its licences in two local newspapers in Arabic and English.
Not having the right cover in place means penalties for employers too.
Dennis explains: “Employers will be fined 500AED for every month or part of a month the employee did not have appropriate cover. In addition, if the employee received medical treatment, their employer would be accountable for any costs that arise.”
A future trend?
While these fines will focus even the most lackadaisical minds on the new requirements, it’s a shift in healthcare delivery that’s likely to become increasingly commonplace. With other countries also facing the same pressures as Dubai, many believe that similar requirements will be introduced elsewhere too. For example, Abu Dhabi has had a similar system for a number of years and some of the other emirates are actively considering the move.
Closer to home, for instance in Germany and the Netherlands, mandatory health insurance schemes have also been introduced. Even in the UK, any foreign nationals who do not have appropriate insurance will be charged 150% of the NHS national tariff for any care they receive.
“A lot of countries are looking to take some of the pressure off their healthcare systems by introducing some form of mandatory health insurance scheme,” says Jelf’s Hilton. “It’s a growing trend.”