UAE’s latest health insurance directive: All you need to know

Employers are currently required by law to provide health insurance to their staff members in Abu Dhabi and Dubai

Vijay Valecha, International Finance, March 26, 2024

In the UAE, employees in the private sector and domestic workers will be required to participate in a health insurance programme. When granting/renewing residency permits in the Gulf nation, employers will have to cover the cost of their registered employees’ health insurance.

The ruling will come into effect on January 1, 2025.

This happened at the same time that the UAE Cabinet approved the creation of a health insurance programme for domestic workers and employees of the private sector who do not currently have coverage. While granting or renewing their residency permits, employers of domestic workers in the nation will be obligated to cover the health insurance of their registered employees.

Employers are currently required by law to provide health insurance to their staff members in Abu Dhabi and Dubai. The mandatory programme in the UAE Capital provides coverage for staff members and their families.

The country’s sizable private sector workforce will have access to high-quality healthcare thanks to the new UAE-wide programme. The scheme will be implemented by the Ministry of Human Resources and Emiratisation (MoHRE) through the launch of pertinent awareness campaigns and programmes.

In the UAE, employees are now required to carry insurance for the second time. Employees had to enrol in a programme in 2023 to safeguard themselves against losing their jobs. Currently, the programme has over Seven and a half million registered employees from the federal government and private sectors.

The Workers’ Protection Programme covers 98% of the UAE workforce, according to Sheikh Mohammed bin Rashid, Vice-President and Prime Minister, who presided over the Cabinet meeting. The programme safeguards employees’ pay and other obligations if their employers file for bankruptcy.

“Today, we approved a new structure for the MoHRE, including establishing a coordinating council for the labour market in the UAE, to maintain its stability and enhance its competitiveness. The workforce is the real engine of the economy, and monitoring their concerns and protecting their rights are essential elements for advancing our national economy,” Sheikh Mohammed said, as reported by the Zawya.

Insurance Sector’s Take On The Government Move

As per a report from the Gulf News, experts in the insurance sector saw the government directive bringing numerous advantages for the sector stakeholders.

“For employees, it ensures guaranteed coverage; for insurance companies, it translates to increased revenues, and their risk pools will expand; and for the healthcare sector, it offers an incentive to enhance healthcare infrastructure nationwide,” the report stated further.

“Premiums may rise initially, especially in Sharjah due to its large population and associated cost of living, but should stabilise over time once businesses adjust to this new operational expense,” an insurance broker told Gulf News.

With Dubai’s population projected to reach 5.8 million by 2040 from the current 3.5 million and the UAE’s overall population expected to reach 11.1 million, analysts see insurers’ risk pools expanding further.

“This expansion will include newly arriving residents who need insurance under the new mandate. This broader risk distribution may lead to more stable or even reduced premiums as the risk is spread across a larger population base,” said Vijay Valecha, Chief Investment Officer of Century Finance, while interacting with the Gulf News.

Noting that a more significant risk pool should ideally mean a lower premium, Ramzi Ghurani, Managing Partner at Petra Insurance, remarked, “Theoretically, the decision to make insurance mandatory for all private sector employees should reduce premiums. However, insurance company prices are based on prices of hospitals and doctors. Unless that’s controlled, premiums may remain the same.”

Also, given the increased influx of new customers, an increase in competition may unfold in the insurance market, which may intensify the competition among insurers further.

“In a competitive market, insurers may strive to attract and retain customers by offering competitive premiums and enhanced benefits,” Valecha said.

Another insurance provider told the Gulf News the unification of health services was crucial for the industry, addressing anti-selection issues.

The broker said, “It would also improve healthcare quality, promote preventative measures, and attract medical investments. It would also result in the expansion of medical services in other Emirates like Al Ain and Ajman and increase job creation.”

Source

International Finance