Dubai: Average premiums on (non-basic) medical insurance in the UAE is closing in Dh6,000 for an annual cover, adding another layer of cost for residents to factor in. A standalone health insurance policy was averaging around Dh4,500 same time last year. Residents could even get coverage cheaper if they looked around.

Now, that’s changed as a combination of higher costs for insurers, inflation in the healthcare sector, and mounting claims show up in what residents are getting charged for their annual health policies, whether for renewals or new ones. Even lower claims the previous year does not help much in the current renewal cycle.

Medical insurance policies are getting costlier as hospital operators narrow down the number of insurers they work with. It has meant that residents need to pay higher if they want to keep going to their hospital of choice or consult with a particular doctor.

“Hospitals being selective about their insurer partners has convinced residents to seek out policies that offer better coverage,” said a top official with a leading healthcare company. “And if they wanted to try out new hospitals, some of the biggest insurers would not even have coverage for them, insisting on at least a 2-year operational performance from the hospital.”

Insurance rates firm up on multiple lines

In other words, residents want to look beyond ‘Basic’ health insurance policies. The Covid phase has brought about dramatic changes in how the population view the importance of medical cover, and how much they are willing to pay for it. (Which is a bit of an irony because Covid-related treatment costs was borne by the authorities.)

“There is increasing demand for enhanced/comprehensive coverage,” said Avinash Babur, CEO of InsuranceMarket.ae. “Customers with 'basic' or 'essential' health insurance plans are realizing the importance of more extensive coverage, leading to a surge in demand for better levels of cover. This is a significant factor contributing to the rising average on UAE health insurance premiums.”


Plus, insurance rates are heading higher across categories. Motor policies now come with a significant hike compared to a year ago.

How UAE medical insurance rates are faring Medical premiums for Q1- and Q2-2022 remained broadly stable,. But between Q1-22 to Q3-22., there was a 6% increase. In Q4, the average premium jumped another 5%. As per the 2023 data, the average premium is up almost 20% compared to Q4-2022.

Will there be more increases on medical?

According to insurance industry sources, on group cover renewals at the start of the year, rates have remained more or less stable. But this was largely achieved by dropping some of the add-on benefits, employees would have got on their health insurance policies in previous years. Of course, more group cover policies feature co-payments of up to 20 per cent on average.

Then, there is the domino effect of higher claims being created. “As customers with basic or essential plans choose to upgrade their coverage, this creates a pool with a higher risk profile,” said Babur. “Insurers are then compelled to adjust premiums accordingly to account for the increased likelihood of claims, which in turn raises the overall average health insurance premiums.”

UAE’s universal healthcare cover

At some point this year, the UAE would make it mandatory for all residents to come under medical insurance cover. Currently, this applies to Dubai and Abu Dhabi.

Insurance sources say a wider pool of the insured does not necessarily lead to rates remaining stable, or even dropping. Any increase comes with higher claims, and healthcare industry costs too have seen sharp increases in the last two,- three years.

This in turn shows up as higher billing for consultations and other treatments. Which insurers have to pass on through higher premiums when renewals come up.

This is where the domino effect kicks in, and residents feel the pain of higher payments towards their insurance bills.

These factors too cause medical insurance spikes• While high-end medical insurance plans have seen stable price increases, hovering around 5% annually, the inflation rate for the healthcare sector often outpaces general inflation. This disparity affects the cost of these services, which subsequently impacts the pricing of health insurance premiums across the board. Regulators periodically permit Diagnosis-Related Group (DRG) rate increases for healthcare providers to ensure reimbursement rates are in line with the cost of providing care. As DRG rates increase, providers can charge higher fees for their services. This, in turn, puts additional inflationary pressure on health insurance premiums, as insurers need to adjust their pricing to accommodate the increased costs of medical services.

• As customers with basic or essential plans consistently choose to upgrade their coverage, this creates a pool of policyholders with a higher risk profile. Insurers are then compelled to adjust premiums accordingly to account for an increased likelihood of claims, which in turn raises the overall average health insurance premiums.