How UAE firms can avoid the five biggest health insurance mistakes

Picking the best health insurance for your employees isn’t straightforward. The marketplace is saturated, with the Health Authority Abu Dhabi (HAAD) stating that there are 41 authorised insurance providers in that emirate alone – the total UAE number likely being much higher. It’s also known that the number of licensed brokers is over 100, and the number of individuals authorised by the Dubai Health Authority to advise on medical insurance sits at over 3,000.

So competition for your business is fierce, with firms climbing all over each other to sell you their products.

Companies often tempt prospective clients with ultra-competitive prices in an effort to secure trade. That may not sound like a bad thing, but in reality it often includes too-good-to-be-true promotions that lure you into buying a product that’s insufficient for your needs. These seemingly economical offers may not provide such good value in the long term, as a reduction in cost often means a reduction in quality of cover somewhere down the line.

The truth is, it’s easy to make errors with health insurance if you don’t know what you’re doing – and this doesn’t just apply to the UAE. A recent report by PMI Global found that nearly half of companies with overseas workforces do not undertake assessments of the region in which their employees work, and 44 per cent of employers do not organise or cover the cost of necessary vaccinations for their staff. Furthermore, 24 per cent leave their employees without any form of assistance programme for psychological support while working abroad, and 10 per cent do not provide any information on where to get health advice.

The road to insurance acquisition or renewal can be rocky and is best navigated by a suitable and competent broker. But you also need to be aware of the most dangerous pitfalls.

So here are five common mistakes to avoid when buying health insurance.

1. Basing your decision on just a few key criteria

There can be a temptation to simplify or streamline the process of researching insurance by focusing too intently on a few key criteria and overlooking other less obvious, yet equally important, features of cover. You may be tempted to make a choice based on the size of the provider network offered – which is, as a rule of thumb, a good decision.

But what if the provider has few or no doctors or hospitals in an area where a number of your employees are based? Does that mean that those employees will be forced to make a long, time-consuming journey to their nearest medical facility? And could that mean that their condition worsens during the journey – or simply that they are forced to spend longer away from work? The size of the provider network may not be as important as the presence of medical facilities in the same locality as your workforce.

Then there are other aspects to consider: How about the technical infrastructure of your potential provider? Will they be able to offer a faster claims process by delivering claims electronically? What is their customer support record like? Do they offer non-branded, generic pharmaceuticals rather than the more expensive branded medications that can add more than 50 per cent to your drug bill?

It’s worth the extra effort to explore your needs as an organisation past the first few obvious criteria. Don’t jump into what may initially seem to be the right fit without considering alternatives that may offer a more suitable all-round product.

2. Lack of technical understanding with the procurement department

Generally speaking, a company’s procurement team will approach healthcare purchasing in the same way it approaches many of its other tasks – driven by price. While this is completely understandable, healthcare is no ordinary purchase. The cover varies greatly from one policy to another and selecting yours based solely on price could leave you and your employees vulnerable should you need to make a claim.

You’ll need to work with your procurement department to sell the notion that dealing with a health insurance provider is a long term relationship rather than a one-off transaction. Everyone involved in procuring health insurance should understand that the right cover – rather than simply the cheapest – is not only better for your employees but also usually more cost-effective for the business in the mid to long term. It should be an easy sell: If you have healthier employees, you have better attendance; if you have better attendance, you have better production and efficiency – and if you have all of this, you should have a healthier bottom line.

A solid, comprehensive healthcare package as part of your employee benefits offering is also seen as a valuable feature when attracting and retaining the best people. So getting procurement (and all of the other contributing voices such as senior management and HR) to understand that your healthcare spend is more of an investment in people, rather than just another cost, is a big factor in being able to choose the best fit.

3. Bypassing the broker

Thinking you can save money by working directly with insurers and cutting out the middle person – the broker – is a high-risk strategy. To go it alone and have that direct contact with the health insurer means that you as a company will have to have a clear technical knowledge of health insurance products to be able to produce a detailed and comprehensive tender.

You’ll also need a deep understanding of the health insurance market to be able to seek out the companies that best fit the needs of your business and its employees. Let’s not forget, there are a huge number of insurers in the region, and choosing between them requires an expert eye – to establish what truly differentiates one policy from another, other than price.

Working with a reputable broker is the easiest way to overcome these challenges. Most will go the extra mile to understand your business, your workforce and the region or regions in which you operate before deciding on who to approach and how to negotiate the best deal. So if you do choose this more advisable route, take a back seat and let them do the hard work. Your broker will almost certainly have a deeper technical understanding of health insurance products as well as a current working knowledge of the market as a whole.

4. Ignoring analysis of claims spend

Your previous claims history gives the best indicator of what your future claims demographic will be, so it makes no sense whatsoever to ignore these numbers when it comes to your next healthcare cover. Using them correctly could save you money in the future. Claims analysis will give you a clear picture of the conditions to which your workforce is susceptible, providing you with a guide on how best to tailor your health insurance. You can then look for a package that addresses the treatment of those issues, and could even help reduce them in the future by offering targeted wellbeing and fitness programmes.

Other features that can be offered by your provider could include appropriate screening to identify and diagnose certain conditions in the early stages, when they are easier to treat. Without an understanding of your claims history and what you most need cover for, you’re entering the process ill-equipped to make the right decisions about your insurance.

5. Not removing the price-point blinkers

Achieving a competitive price is, and always will be, important. But becoming too focused on this is counterproductive. It’s easy to have tunnel vision and not see that the lowest price today may mean inadequate service down the road. As touched upon earlier, the cheapest product may correlate to poor administration capability, unreliable technology solutions, slow claims processing, mediocre provider networks and a lack of supporting benefits such as mobile doctors, dental and optical care or wellness programmes. In short, becoming fixated on the lowest price tag may leave you with a sub-standard product that won’t save you money in the long term.

Short cuts can lead to big problems

To summarise, the process can be complex and confusing and shouldn’t be concluded on price alone. As mistakes are easy to make in a crowded marketplace that’s packed with intricate and potentially confusing deals, it makes sense to defer to a broker who has specialised knowledge and understanding of the market, and who also understands your company.

The annual purchase of corporate health insurance is rarely straightforward – but a pragmatic and cautious approach will secure a healthcare package that gives your employees what they need at a price that makes economic sense, both now and in the future.

Stephen MacLaren is the regional head of Distribution, Human Capital and Benefits at Al Futtaim Willis