Flexibility in health benefits may not be coming to the Middle East yet, but there is still plenty of scope for plan innovation, hears Owain Thomas.
With mandatory health insurance now a growing part of life in the Middle East there is a keen need to understand what clients, be they individuals or employers, are seeking when they take out more comprehensive plans.
The Health & Protection Middle East IPMI Roundtable panel agreed mandated insurance coverage in Dubai and Saudi Arabia was seen as quite comprehensive.
With Qatar and Oman still to unveil their minimum requirements there is some uncertainty there, but the expectation is these locations will be somewhat on par with the rest of the region.
Therefore for insurers and advisers, the ability to focus on what benefit elements are driving client choice is particularly vital to differentiate their offerings and services.
Flexibility and personalisation of benefits is one of the biggest requests as Jamil Kabbaj Renou, senior vice president – risk management segment and GBM local leader at Mercer Marsh Benefits UAE highlighted, appealing for insurers to become more open in this regard.
“An element that’s valid for startups and large corporations now is the lack of flexibility from insurers in the market,” he said.
“When we talk about plan design, about an elective element within the contract, that allows startups to be able to attract their employees without really increasing costs because they can choose what they really want, rather than just going with the standard for everybody.
“That’s happening more and more with large corporates that want to control cost and don’t want to spend as much, but still want to appease employees as much as they used to.”
Leah Cotterill, chief distribution officer for Middle East and Africa, Cigna Healthcare noted the personalisation trend was coming through the health insurance market in general, but complete freedom was not possible yet.
“There’s going to have to be a fine line between giving employers a solution that can offer something that feels personalised with that balance of risk and ensuring products remain sustainable,” she added.
Managing medical costs and product sustainability
This brings in the subjects of medical inflation, claims experience and healthcare costs which play a key role in the dynamics of the region at present.
And complicating the market is the entry of cheap elementary plans which meet and cover basic mandatory requirements.
Boyd Edmondson, director, corporate insurance services at Beneple noted how this process had already begun to develop in different ways.
“We’re seeing hospital plans where it really is unregulated but the products will meet the requirements if an individual has a serious condition,” he said.
“So for legislation and regulatory purposes you get your basic plan in place which is really cheap and cost effective, but potentially there’s the rollout of hospital-type plans.”
This demand for creative ways from insurers to offer treatment through selected facilities was echoed by Neil Carruthers, account director – international people solutions at Lockton Middle East North Africa.
“We’ve seen hospital network flexibility where you can create a separation in the networks around outpatient and inpatient treatment, because outpatient is the burning factor in most pooled risks in most corporate policies.
“Having that flexibility in products to meet those kinds of demands where you can say, if it is serious for a patient, then you’ve got access to these world class facilities and high-end networks, but for your day-to-day and your minimum requirements, then here are these clinics.”
Pacific Prime CEO Middle East and Africa David Hayes noted insurers had tried in this area and some inpatient-only plans were available, but cost often proved to be a restricting factor in take-up.
In discussions around flexibility, Rachel Slaiby, assistant vice president, senior business development analyst at Marsh Emirates Insurance Brokers recognised the struggle it can be for advisers, particularly when more flexible options are commonly available globally.
“In the US you will see plans for SMEs where they can pick and choose their plan benefits, but also employees within the same company can pick and choose their own benefits,” she said.
“But in the UAE I’m not sure the medical insurance universe is mature enough to handle such a thing with medical inflation and overutilisation which is still ongoing.
“And with the global economic situation, do we see insurers really opening-up to be more flexible for SMEs? Yes, we’re doing well in the UAE, we’re in the right place at the right time, but do we really see this happening soon?
“I wish we could have something like this, but I don’t see it happening in the short term.”
Engagement and wider benefits
Instead, with margins tight for insurers in the still maturing region, for the time being it appears ancillary and add-on benefits are likely to be the main source of demand, development and take-up in Middle East health insurance products.
But all is not lost as Lockton’s Carruthers emphasised the potential for offering a wider range of workplace benefits.
“There’s definitely a market for pensions, there’s definitely a market for additional critical illness and income protection, and life insurance has always been an option that people take,” he continued.
“These are the things that as advisers we can present to our clients and say ‘Yes, here’s the health insurance, this is mandatory, but here’s a number of options you can take to create that holistic benefits package’.”
One of the challenges with the current health insurance market in the Middle East is the way in which plan benefits are utilised, sometimes unnecessarily so, which can cause a surge in costs.
For example, education around employee assistance programmes (EAPs) and telehealth is still a priority but the panel noted that despite significant time and energy being spent by advisers and insurers on promoting these services to help stem outpatient utilisation, this education is still not getting the traction it should have.
As Mercer Marsh’s Renou explained, communicating with family members is vital.
“In international plans, one third of members are employees, what do you do with the other two thirds?” he said.
“Usually when you have one spouse working, it’s the other spouse that takes the kids to the doctor, and they don’t know about EAPs, about the mental health support and that’s one of the reasons why the utilization is quite low.
“How do we communicate better with those family members to try to drive that for the entire policy, not just one third because an employee is not going to get home and say, ‘Oh, by the way, we’ve got an EAP program’.”
One of those tactics may be to target communications towards family needs, highlighting support for specific conditions such as asthma and diabetes which are common among children.
Looking at the other end of the age spectrum, the panel highlighted that with more people staying for longer and looking to retire in the region and a lack of state-supported healthcare for older people, there was need for insurance products to cover this demographic.
For those with the major IPMI providers, continuation of coverage for individuals after leaving a group scheme is available to cover pre-existing conditions, but this can still result in a massive increase in annual premium.
And for those not already covered by providers offering this service it can be almost impossible to find.
Another request directed to insurers and healthcare providers was to invest in administrating policies outside the UAE.
This is particularly so in Saudi Arabia with the significant growth being seen in scheme members but administration failing to keep up.
“The UAE has set the standards of how health insurance is run and in my opinion, KSA is still trying to get up there in terms of policy administration and in terms of the networks,” said Ashwin Ramesh, head of employee benefits at United Insurance Brokers.
“So when we’ve seen populations move from Dubai or the UAE to KSA, we have members expecting the same sort of services, expecting the same sort of levels that they were used to in Dubai, but which is not being met by KSA.”
Ramesh acknowledged that the growth of some companies in Saudi Arabia had been extremely rapid with a knock-on for the insurers and member expectations.
And with large scale people movements between the two jurisdictions likely to continue rising, the issues of different regulatory requirements could become a significant burden.
“That’s something insurers and brokers need to look into because there is a need for clients to have a seamless policy from the UAE to KSA, which is going to be extremely difficult,” he continued.
“That is a problem we see might arise in the next couple of years.”
This was seconded by Marsh’s Slaiby who added: “I see a big, big challenge when you’re working with companies based in the UAE who want to extend their benefits to KSA.
“We struggle a little bit: the options are limited, the legislation is so different, so this is definitely one of the biggest challenges.”
The bottom line
Encouragingly though, the panel noted clients are coming to them wanting to provide health benefits similar to what is already offered around the region.
They are seeking to be in line with what is offered by competitors and benchmarking against similar organisations or industries, not necessarily what is common in the home location.
Ultimately however, no matter the situation, location or industry, the bottom line is still king in the Middle East.
“It comes back to price at the end of the day, it does,” said Michael Plaugmann, associate director, employee benefits division at Malakut.
“It doesn’t matter how well you have laid the foundation, at the 11th hour they will come back and ask, ‘What about a cheaper plan?’ It never fails and you learn the hard way.
“For example, a good company with headquarters in Europe says this is our budget, we can take this increase. You deliver that, then head office says, no, it’s got to be 20% less than that.
“And you know the type of policy they want where dependents are not included, it’s employee-only because it’s too much to include the dependents.
“What can you do about that? Can you change it so that the employees can afford to pay towards their dependents being on the policy? All of this is coming in, so we need alternative fringe benefits, flexible benefits.
“It’s in Dubai style, it’s going to be just a matter of time until it just permeates through and everyone starts doing it.”