Author: Alniz Popat (Founder and CEO of Lifecare International)
Article published in: Middle East Insurance Review (Jan edition)
Over the last decade, the medical insurance industry in the GCC has become saturated with too many insurers in the market. There are over 35 insurers in the market, each with different long-term and short-term ambitions. This fragmented landscape and recent business challenges have now led to a stage where the inevitable market consolidation is taking place.
The region’s insurance industry is currently witnessing a raft of mergers and acquisitions. As regulation matures and becomes more stringent, it is natural that smaller players who lack global expertise and the agility to react to market and regulatory changes will potentially be squeezed out of the market. Large local insurers and global international insurers will become more influential to help shape the market, ensuring long-term sustainability and affordability of the health insurance market.
This phenomenon has happened in other mature markets. The UK, for instance, has four major medical insurers and combined they have 94% of the market share. These major players are well positioned to influence the shape of the private healthcare sector, ensuring long-term sustainability and affordability.
Consolidation can deliver advantages for the consumer too. In 2012, a dispute broke out between a major insurer and one of the UK’s largest private hospital groups, in relation to increased costs. Higher tariffs set by a hospital impacts insurance premiums, resulting in higher premiums for the consumer. After negotiations failed, the insurer took a bold stance of ending all arrangements with the hospital group. The hospital group was forced to revisit their rates, and an agreement was reached, which was in the best interests of customers. While the insurer’s stance may have caused temporary disruptions for clients, it was necessary for the greater good of their clients. The new arrangements provide a good basis to address the affordability of private healthcare while maintaining current standards of high quality care, said a statement from the insurer.
This is a positive example from an unsaturated market, where insurers can really exert their influence and help support the quality, sustainability, and affordability of the private healthcare system.
As the healthcare sector in the GCC expands, there is an increasing drive to promote private spending in the sector by encouraging the adoption of public-private partnership (PPP) models. A positive outlook for healthcare spending is driven by a number of factors, including the prevalence of compulsory health insurance, which will likely strengthen the sector by improving accessibility and utilization. The privatization of hospitals, clinics and mandatory medical insurance, especially in Dubai and Abu Dhabi is likely to encourage spending and contribute to a health system with a greater degree of integration between providers and insurers[i].
However, mandatory health insurance also drives up the cost of doing business for small and medium enterprises (SME). The SME sector is the engine of UAE’s economic growth, comprising 95% of all businesses and employing 42% of the nation’s workforce. As a sector, SMEs contribute 40% to the value of Dubai’s economy, and 60% to the UAE’s economy. In a volatile business landscape, SMEs looking to increase profitability by reducing costs may be tempted to opt for basic local coverage, leaving employees to top up their cover independently if they require a higher level. However, with talent risk being cited as one of the biggest challenges for businesses in the post pandemic era, SMEs looking to attract and retain talent, should definitely look at different levels of health insurance. This could be based on parameters such as seniority, length of tenure with a company, and specific needs. Offering tailored health insurance benefits translates to long term returns on investment, through employee retention.
For insurers, the SME sector presents a wealth of opportunities if they can fulfill the demand for simple, transparent and customer-centric products. SMEs’ business needs have been changed by the pandemic. Insurers should be designing and offering products that help SMEs identify the right coverage for their employees and businesses, while addressing the new reality. For example, the rise of the “expectation economy” has even percolated into buying insurance. Customers are looking for a user-friendly, digital journey and a one-stop shop that addresses all their needs rather than unbundled individual products.
Wanted: Round the clock care
The events of 2020 have shown that medical insurance is not enough to protect people during a crisis. Customers need access to expert advice and guidance on healthcare needs as well as regional travel, political and security matters. In a connected world, people live, work and travel to parts of the world where the political situation and security conditions can change overnight.
Increasingly, people and businesses need round-the-clock security and travel advice to help them make informed decisions, particularly with respect to medical tourism. In addition, as standards of healthcare differ from region to region, there is also a growing demand for access to objective advice and guidance from experts from a particular region to help customers make informed decisions about their treatment protocols.
Inbound medical tourism in the UAE has been growing steadily, with visitors seeking treatment ranging from major surgery to rehabilitation, to cosmetic corrections. According to the latest Medical Tourism Index Ranking, Dubai and Abu Dhabi were ranked sixth and eighth respectively, as leading global destinations for medical tourism. [ii]The UAE’s reputation as a medical tourism destination is consolidated by a robust hospitality ecosystem, including numerous attractions, hotels, entertainment, world-class aviation services and strong transport logistics.
Aligned with this, the region is seeing the evolution of premium healthcare insurance products that offer a level of cover and, most importantly, a level of service that is designed to deliver beyond just pay and reject claims. As an example, in the hour of need, premium insurance provides the reassurance that pre-authorizations are managed efficiently to ensure customers can receive treatments without the insured party being involved to sort out their own authorization during a stressful time.
Another benefit of being with a premium health insurer include not being re-underwritten so continuous cover is possible. Existing health conditions that may have developed during the term of the insurance, will be reassessed and will either be excluded upon renewal or the price increased. Premium insurers can also transfer plans to other markets where they operate ensuring continuous cover. There is no age limit, and agreements are with world class facilities to enable customers to access quality healthcare. Services offered include a “Medical Concierge” – regional experts who can source credible facilities and healthcare professionals globally enabling customers to make an informed decision before undergoing treatment.
Premium insurance products such as Cura from Lifecare also tailor products for SMEs to take care of their employee’s health and wellbeing by supplementing their health insurance as well as ensuring that the business has access to key services that tend to be available to corporates.
The rise of telehealth
The COVID-19 pandemic catalyzed the growth of technology and digital health. Insurance providers in the region have turned their attention to telehealth as a service offering to deliver faster, cheaper, and more accessible care. There’s no doubt that telehealth has proven to be an integral tool to keeping healthcare accessible amid the pandemic.
Convenience aside, telehealth services are also cost efficient – the usage of an insurance policy does not go up if medical advice is sought using the telehealth service. The long-term impact of implementing a telehealth service is that insurance cost increases are likely to be lower.
Like every sector, healthcare is also expected to be disrupted by greater digitalization. New models of healthcare focused on remote monitoring and consultation are expected to emerge. Telehealth is already being integrated into the UAE’s government healthcare systems.
For insurance providers, this is the opportunity to re-assess and re-evaluate their product offerings. Providers must proactively play a part in tailoring plans to meet customers’ specific needs. Like other businesses, insurance too can only thrive in the new normal provided it is agile, innovative and customer obsessed.
If you require expert guidance on your healthcare needs as well as round-the-clock security and travel advice, please click here.