We all know we need insurance, especially when it comes to our health. After all, medical insurance is a mandatory requirement in the UAE. However, the type of insurance policy we buy in this line of insurance differs from person to person according to our individual needs, knowledge and budget.
For those of us engaged in the industry, the period post-pandemic has been particularly interesting. The emergence from the chrysalis of Covid-19 has seen a real shift in the health insurance market in Dubai, with both buyers and insurers alike demonstrating different behaviours and approaches than before.
Buying Behaviour: up close and personal
Like most products of a “personal” nature, insurance is hugely influenced by psychology. Covid-consumerism has meant that buyers are now much more aware of availability of insurance and assurance products and as such, have become more sophisticated in their buying style. We’d summarise our findings as:
- From Compliance to Experiential: there has been a shift from a need to buy driven by federal mandate to a need to buy from a personal protection realisation. Consumers now see the value of health insurance to cover medical expenses like never before, either through first-hand utilisation or media storyboarding.
- From ground-floor to high end: it’s now not about covering the essentials but covering every eventuality. Consumers have realised that covering themselves and their families is a cost worth covering and are making heath a priority purchase. It might cost more premium but it’s a small price to pay for more peace of mind.
- Sales are more specific: We see a lot of customers coming to us now with a specific shopping list of covers. Specific conditions, specific treatments, specific providers: it’s all about tailor-made treatment. Consumers are much better informed so now what they want, from where and at what price.
- Knowledge is power: With increased knowledge comes increased demand for service. Consumers know that there is a big health insurance market in Dubai with any number of players competing for business. This has created a “buyer’s market” with consumers trying to call the shots. Some of their demands hit the target but many are wide of the mark when it comes to unrealistic turnaround times and pricing. Just as your body may be a machine but it’s not a car, so health insurance isn’t the same as motor insurance. It takes longer to process but is still fast in context.
- Demand for new deals. At its core, Health insurance in the UAE is linked to an underlying visa, which typically renews on a two-year cycle. There are calls to make Health insurance policies available for a similar period to make for a seamless experience. Another market development for the future?
Buying Behaviour: strictly SME business
It’s not individuals that are seeing things differently these days. Small Medium Enterprises (or SMEs are they are commonly referred to) are also looking beyond the basic and seeking more sophisticated options. In a highly competitive market, business buyers are looking for suites of services as add-ons to their base product. Popular features include:
- Direct access to specialists
- Better networks: coverage, convenience, cost of services, claims support
- Holistic services: employee welfare, stress management, weight management, discounted fitness programmes and memberships, preferential rates on health aids and home-based devices
One aspect that has always been a challenge in the “trickle-down” of information from enterprise to employee. With HR departments typically controlling cover and managing employee membership, disseminating details to employees in real-time can be difficult, especially in light of increased remote working. This means employees can often be in the dark when it comes to the all-important policy particulars and who to call in the event of a claim. At InsuranceMarket.ae, we offer orientations to all our commercial customers to help them manage such situation.
Ensuring their future: Insurers react
Akin to consumers, Insurers too have been revisiting their risk appetites and selecting strategies that future-proof their business, notably;
- Profitability is an increasing issue: lower end plans tend to “burn” with volume claims versus low premiums. As a result, higher cost service providers are being removed from insurer panels
- Information integrity: increasing fraud has driven a need to validate and corroborate information against databases, public records etc and any applications or claims containing misleading, non-disclosed or falsified information are being rejected
- Smarter service: developing digital solutions, providing portals and online process for application and information management are all welcome tech advancements that streamline and speed-up services to customers
- Same difference: with the departure of some outsourced service providers in the past couple of years, coupled with a buoyant mergers and acquisitions landscape, the TPA market is more consolidated than before. Put simply, many insurers are using the same service providers and looking for differentiators like turnaround times
- Marathon or sprint: whilst there are still insurers and reinsurers that are all about the top-line, the emerging message is one of maturity, with a focus on bottom line and sustainability
- Ramping up regionally: international insurers are increasing their investment and commitment: health is seen as an attractive and buoyant business and playing in this market is paying dividends, literally. The same can’t necessarily be said for property & casualty business
Diving in: the pool-rated market
When writing multi-member or group schemes, a popular approach has been to underwrite via a pool principle. Put simply, this means that rather than underwriting each member (employee) individually, the rates and overall premium is driven by a mean/mode average approach. Average age, average previous premium, average previous claims cost. Decide on a rate per member, multiplied by the number of members and calculate an overall premium.
There are of course advantages to this approach: the main ones being time and money. However, there are changes emerging that are creating some issues, notably:
- A duty to disclose: Some brokers are being put in an awkward position as they are unclear as to what and when they should share. To what extent does utmost good faith to underwriters apply? Insurers are encouraging them to “blanket” business by covering under a group declaration but some brokers find it uncomfortable as they cannot unsee or unhear information at an individual level that might alter the approach of the underwriter. You’re either compromising the client, the company or a competitor. After all, inaccurate information equals an inaccurate premium and distorts the market price: especially if a competing broker presents the true picture and secures a different quote!
- A shift in stance: As a result, some insurers are deciding to underwrite on a selected individual basis at renewal, meaning the approach has altered from previous and the scheme is no longer truly pool rated.
It’s fair to say that both of these factors have caused a “splash” in the pool rated market!
Brokers are back
Despite the developing digital backdrop, interestingly aggregators are not in the ascendency. Whilst still having a place in the retail EBP market (compulsory Basic plan products), their levels of market penetration are limited. Similarly other distribution channels such as online direct, bancassurance and agents are also not seen as a threat to the buoyant broker position.
As the permutations in products increases, so does the need to de-mystify the market, clarify the covers and provide security and stability. That’s the value of a good broker: not only a good source of products and plans but of information too, and here for the long haul.
And at InsuranceMarket.ae, we consider ourselves to be amongst the best in the business.