The sharp sell-off in global oil prices that began in mid-2014 triggered an economic slowdown across the Gulf Cooperation Council (GCC) states, with enormous consequences for many sectors, including the health insurance industry. Despite this unexpected turmoil, however, significant changes in government health insurance regulations and rising populations are expected to generate some growth opportunities for private health insurers over the coming years, especially in the Kingdom of Saudi Arabia (KSA), where the private health insurance market is expected to grow by more than 9 percent annually through 2021, according to projections from Oxford Economics. Economics forecasts that the private health insurance market in KSA will grow to reach USD 3.5 billion in 2021, from an estimated USD 2.4 billion in 2016, representing an overall rise of 45 percent. The sudden decline in oil prices has forced the GCC states to think more strategically about how to diversify their economies. And, in many states, developing a more robust health care environment has emerged as an essential element of their growth plans. Many, like the KSA, are moving to mandatory health insurance programs to help boost the medical infrastructure and decrease the tendencies of some Saudi residents to leave the country for medical treatment. This, in turn, is expected to boost premium revenues in the sector. The single largest economy of the GCC states, with a population of 32 million, the KSA now requires, as of 2017, health insurance for all employees in the private sector, as well as their families. Similar rules are now also in place in Dubai and Abu Dhabi in the United Arab Emirates (UAE).
Only one percent of the total policies registered with insurance companies in Oman is for health as compared to 75.4 percent of vehicle insurance, as per the figures of National Statistics and Information. The figures look surprising because 70 percent of the mortality cases reported in Oman is because of Non-Communicable Diseases such as diabetes, cancer, cardiovascular problems and chronic respiratory diseases. High premiums for insurance policies as well as the free treatment of Omanis in government hospitals are the reasons for the low demand for policies. The Health insurance market has now mandated health insurance law in Oman. Residents in Oman are required to have a minimum level of medical insurance coverage with minimum benefits pursuant to the Resolution Number 34 of 2019 for the Issue of Unified Healthcare Insurance Policy Form, also known as Dhamani, issued by the Capital Markets Authority (CMA) in March 2019 and is now in force ("the Law"). The Law applies towards the employer market and the beneficiaries arising from those relationships including employer, employee as well as the dependents. The Law applies a "Basic Benefits" as well as an "Optional Benefits" coverage, standard form "Policy Schedule" for parties' signature. For the pre-contractual disclosure requirements, the Law applies a standard "Insurance Application".
Chapter One of the Law states a "Unified Health Insurance Policy" ("the Policy"). The term "Insured" is defined as "natural or unnatural person responsible for paying the insurance premium" and the term "Beneficiary" is defined as "employee or employee dependent for whom the Insurer performs the duties assigned by the provisions of the Policy". The Dependents include employee's legally wedded spouse, residing in Oman, employee's children who are under 21 years age and any person residing in Oman and is dependent on the employee. This includes the employee's parents and other relatives based in Oman, maid or house help who are sponsored by the employee.
An Insurer has been defined to be an "Insurance company licensed to practice health insurance business in the Sultanate". A completed Policy must be submitted by the Insured as a legal obligation. The Law covers application, coverage, mandatory minimum benefits and claims management.
Chapter Two of the Law defines a wide interpretation of what shall constitute the contract of health insurance, and includes all basic information, details and common practices in healthcare insurance contracts. The Insurers will need to take care regarding their pre-contractual documents, as these may unintentionally constitute the contract of insurance. Chapter Two places obligations on the insured to disclose correct and accurate information. The CMA issued the Code of Conduct for Insurance Business which requires the Insurers to inform the Insureds of their duty to disclose any relevant information. The Law, therefore, applies the duty of utmost good faith (uberrimae fidei).
The combined limit under the Policy is OMR 4,500 in terms of financial spend, which is much lower than the KSA and UAE mandated schemes. The in-patient treatment limits for the policy year is capped at OMR 3,000 and includes a usual basic cover of admission in hospital or daycare, room cost, cost of treatment, consultant fees, diagnosis and test, medicine, companion cost and ambulance cost. This also includes the cost for pre-existing and chronic conditions for the in-patient treatment, while the latter is excluded from an out-patient treatment. The hospital admission as per the Policy must be in a joint room limited to 30 days for each instance, whereas the ambulance cover is limited at OMR 100 each trip. Out-patient treatment is limited to OMR 500 for each policy year, and the cover is limited to consultancy fees, diagnosis and tests, lab fee and pharmacy fees. The Policy also includes the cost of repatriating a deceased Beneficiary to their country of origin, for which the limit allocated is OMR 1000.
Any deviation or departure from the basic benefits is not permitted unless agreed as a Schedule to the Policy and is signed by both the parties. When any additional benefits are opted for by the Insured, they must be set out in the Optional Benefit Schedule format provided under Appendix 3 of the Law.
The Law sets out specific obligations on how it will be administered:
- The Health Insurance Claim Management systems of the providers must be compatible with the system of electronic claims applicable in Oman;
- The Insurers will bear the cost of a medical Consultation only if there is a prior referral from a licensed physician;
- The providers must seek prior approval for all in-patient treatment and for all out-patient treatment where costs exceed OMR 100, however for emergency cases treatment must start immediately;
- The providers must upload all details in the online application for approvals, and the Insurer must respond within 30 minutes with their decision, failing which it will be deemed as approved;
- The provider is also required to respond to any inquiries or observation by the Insurer within 30 minutes of the inquiry or observation being made;
- For any claim made outside the network, the Insured must make a claim within 120 days of the claim, and the Insurer shall compensate the Beneficiary within 15 days from the date of receiving documents in support of the claim; and
- When any claim is rejected by the Insurer, the Insurer provides to the Beneficiary, within 10 days of rejection a written statement stating the reasons for the rejection.
The mandatory basic minimum coverage of the Policy is set out under Appendix 4 of the Law, providing two options to the Insured based on which premium will be determined by the Insurer. Both the options apply the same coverage terms and limits; however, the first option provides for deductibles on certain categories while the second option does not require any deductibles to be paid by the Beneficiary. The deductibles under the first option are limited to out-patient treatment only and are set at 10 percent for medicine, subject to the limit of OMR 5 per visit and 15 percent for consultancy fees, lab fee and diagnosis for providers within a network, with a cap of OMR 20 per visit, and at 30 percent for providers outside the network, with no cap.
Mandatory health insurance rules, Decision Number 78/2019, issued by Oman's CMA, establishes the regulatory infrastructure for the health system, Dhamani. The CMA developed the rules covering four aspects of the mandatory health insurance system:
- General provisions which govern the health insurance market.
- Licensing requirements for insurance companies.
- Obligations for the main parties in the insurance relationship, third-party administrators (TPAs), employers, employees and health services providers.
- Dispute resolution.
Licensed insurance companies, health service providers, TPAs and others will have to use the electronic "Dhamani Platform." The purpose of this electronic platform is primarily to digitalize the private healthcare system and health insurance services in Oman and enhance the monitoring of the overall system in Oman. As of October 2019, the CMA aims to launch the e-healthcare system by mid-2020. The regulations also restrict insurance companies from retaining more than 40 percent of the insurance premiums in Oman.
Health Vision 2050
Since 1976 Oman has been through three distinct phases of development concerning the health care sector. The first phase ran until 1990 and was directed at building Oman's health infrastructure. The second phase ran from 1991 to 2005 and focused on the development of various components of the health system. The third phase began in 2005 and is now targeted at providing comprehensive health care coverage by using high-level strategic planning to address the specific needs of the sector.
In 2014 the government of Oman released a long-term plan for the country's health care sector, Health Vision 2050. The plan envisages large-scale investment in the health care sector to further create a well-organized efficient health system.
With the population of Oman expected to double by 2050, Health Vision 2050 aims to establish up to 10,000 health centers to meet the demands of a growing and increasingly urban population. Health Vision 2050 aims to move the treatment of non-communicable diseases out of the hospitals and provide health care closer to the patients' homes.
Health Vision 2050 points to the growing need for geriatric care facilities, considering the number of elderly people living in Oman over the age of 60 are expected to increase from 6.1 percent of the population to 13.1 percent through to 2050. Home care should be provided for geriatric patients finding it difficult to attend health facilities as well as the terminally ill and those with chronic long-term conditions. Oman has made impressive steps in building sturdy health infrastructure, mobilizing the community, and promoting greater access in health care delivery to ensure the universal human right to health.
Across the GCC, health care is intimately connected to the macroeconomic outlook for oil prices and continuing efforts by governments to improve the delivery of health care services for their people, both local citizens, as well as expatriate workers. As each state seeks to diversify its economic base, the health care industry is poised to expand further, as will the demands for health insurance. In some of the region's larger economies, such as the UAE and the KSA, high premium growth is expected to persist, making the region relatively attractive to health insurance providers.
Originally published by STA Law Firm, August 2020
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