When compared to other countries around the world, the UAE has a fairly young healthcare market. Health insurance has been available in the region for nearly 40 years and originally grew from international carriers providing cover from abroad, and was only ever bought on a voluntary basis.
In 2006, Abu Dhabi implemented its mandatory health insurance policy for all residents. The Dubai Health Authority (DHA) followed the example and now also has a law in place that requires both Emiratis and expats to have insurance in place to be able to cover the cost of any treatments or care. The northern emirates, such as Sharjah, Ajman and Fujairah are expected to follow suit and establish a similar law over the coming years.
The mandatory enforcement of insurance, led to higher premiums. As demand for insurance increased – employers face pay penalties if they do not insure their staff, and staff pay penalties if they do not insure their dependents. Average premiums for local family insurance increased by an average of 31% in 2015 (compared to the 2014) levels. In 2016, a year later, average premiums for local family insurance declined by -4%. This indicates that the market responded to the immediate spike in prices, after the mandatory insurance law was passed.
Unlike family insurance (insurance for dependents in the household), which can be paid for by the firm or an individual employee, local individual insurance is mostly bought by employers on behalf of employees. Individual insurance, unlike family insurance, is a less elastic good. Employers are required to insure employees, while insuring dependents is optional. This explains how there has been no decline in the premium rates for individual insurance, but a decline in premium rates for family insurance. In fact, individual premiums rates have increased by 3% in 2016 compared to the 2015 levels. There is less likely to be a reduction in premiums in the future. Below we assess the causes that are likely to result in a further increase in local individual insurance in the UAE.