Medical insurance creates management challenges

Rising awareness of the need for health insurance is cited in the report as one of the factors that is driving growth in the market.

However, many companies employing expatriate workers are reporting a degree of confusion about their responsibility for covering health insurance for employees.

In 2007, the Health Authority - Abu Dhabi required that all employers arrange for medical expenses cover for expatriates and their families resident in Abu Dhabi.

For lower wage earners, this is provided by Daman, the national health insurance company, on a subsidized basis, while higher wage earners can elect to work with any insurance company which has received a license to operate.

Dubai is also in the process of introducing similar legislation, with implementation expected later in the year and many companies are trying to gain a sense of how the changes in the law will impact them.

Clyde & Co, an international law firm in the Middle East, estimates that new compulsory health insurance schemes for expatriates and their dependents could conservatively cost employers up to Dhs4bn across the UAE, and over Dhs1.5bn in Dubai alone.

"Medical expenses insurance is not like most other insurances - options, exclusions and the details vary so tremendously that only someone with specialist knowledge will be able to advise the most appropriate policy,"

said Robin Ali, Employee Benefits Manager, Nexus.

"The changes in the regulations relating to healthcare insurance - combined with the lack of human resources departments with the depth of experience required to fully understand the area - means that many companies are facing some tough decisions in the coming months," he added.

One of the challenges for companies selecting healthcare policies is that expatriate workforces in the Middle East differ in a multitude of ways - age, sex, nationality, type of job, medical history, salary, and geographical dispersion - so that premiums and policies can vary significantly.

In addition, the level of benefits offered by different groups can vary significantly.

To add to this there is a lot of variation in the terminology used by different insurers. Given that there are dozens of providers operating in the market, these factors are combining to make the job of the professionals with responsibility for selecting healthcare policies an extremely difficult one.

As part of its specific offering for small and medium businesses operating in the region, Nexus is now offering a professional advisory service on issues relating to employee healthcare policies.

"Given the challenges within the market, many companies required unbiased advice on this area. Companies can approach the insurance companies directly, but the advice they receive is unlikely be independent. Given the demand in the market and the changes in the current policies, we anticipate a strong take-up of this professional advisory service," concluded Ali.