Covid-19 impact: How should the UAE’s health insurance sector respond?

Now that we are seeing an easing of restrictions in the UAE, the Covid-19 discussions have evolved. What about the aftermath? What will the post-coronavirus global economy look like? The industries most impacted, economically, by the pandemic are obvious — global airlines, retail outlets and hospitality brands.

According to reports, in the GCC, the IMF has told us to expect negative growth, of about 4 per cent, but history has shown us that regional economies are resilient.

So while the pandemic will pose some challenges in the short term, it will definitely also offer some opportunities for various sectors of the local economy, and the businesses within these, to evolve and better serve the community.

Focusing on the health insurance sector, regional regulators are already on record saying that while they are by no means inevitable, mergers and acquisitions (M&As) are an option for the GCC insurance industry.

The guarded statements of the UAE Insurance Authority are an indication that all players in the sector — regulators, organisations, brokers and insurance companies — face a shared future of deep change.

Regulators
Regulators will be taking long, hard looks at what is working and what is not during the Covid-19 era.

The Dubai Health Authority (DHA) has already shown its support for virtual healthcare via the Doctor for Every Citizen initiative that it launched late last year. But the pandemic may act as a natural accelerant to these plans, as it has revealed the convenience and safety of virtual medicine, not to mention its potential to reduce the resource burden.

And as we usher in the era of telehealth, we can also expect to see a slew of regulatory frameworks spring up around issues of technology, to protect critical systems and guarantee patient confidentiality.

Plan sponsors
In the immediacy, organisations are looking for ways to contain costs, health insurance coverage costs included. Every business in the GCC will be impacted, to varying degrees, by the coronavirus.

Oil prices have hit historic lows and those GCC economies, like the UAE, that have been visionary enough to diversify away from petrochemicals, have moved into the very industries that are facing some of the biggest challenges — commercial aviation, hospitality and retail.

Companies will be more prone than ever to shop for bargains upon renewal. Of course, they will likely remember offers such as free coverage for a month or the flexible payment options made available during the crisis. But as they work tirelessly to return equilibrium to their operations and balance sheets, they will look for insurers that can support their new status quo.

Some may want to increase their overall co-pay or reduce their benefits, to lower premium costs. Others may opt for comprehensive regional coverage over international. They will expect insurance companies to be ready with plans that fit circumstances.

Apart from the cost factor, we should all expect sponsors to demand a wider array of benefits for their employees. The situation in which we now find ourselves has been particularly hard on stay-at-home families. Future employee assistance programmes (EAPs) will have to reflect the emerging importance of services such as mental wellbeing support and telehealth.

Brokers
Never has it been more important for brokers to establish themselves as trusted advisors in the eyes of customers. As health insurance providers innovate furiously to attract new customers, brokers may shed the traditional middleman role to exclusively front for the best provider they can find. They will then be looking for the best solution for a sponsor, rather than the price optimisation that is their current primary focus.

Those brokerages that are slow to adapt may be the subject of the M&A activity alluded to by the UAE’s insurance regulator. We can safely assume the post-coronavirus history of the brokerage segment will be one of consolidation.

Insurance providers
Offering customers premium holidays, flexible payment plans and profit share structures are just the first in a long line of moves needed by insurance providers that want to avoid fading away. Their existing customers must be preserved, as they will all be struggling.

Perhaps concessions from insurance providers alone won’t exactly be the difference between a customer’s continued presence in their industry or their inglorious exit from it, but solidarity is one of the clearest lessons being learned during this period of uncertainty. And solidarity is a two-way street.

Longer term, new services such as virtual healthcare must take precedence. Most of us are unlikely to return to our old ways completely — even if some of us are not preparing for the next outbreak, we will demand the services that we found convenient during this one. Given the success of telehealth services during the pandemic, many, if not all, customers will now view them as an integral part of plans going forward.

Meanwhile, over the long term, providers will undoubtedly preserve their own positions by diversifying their client bases — geography, size and cashflow status will all play a part in this transition.

Many insurance providers might also decide to review their product design. Providers must play a part in their clients’ risk management, identifying issues – associated with a customer’s geography, industry or population — ahead of time and tailoring a plan to meet their specific needs.

Also, products will have to reflect the likelihood of the recurrence of our present living conditions, either through the resurgence of Covid-19 or because of a new threat. Finally, the pandemic has shone a light on the importance of mental health and well-being, so these are sure to become a mainstay of insurance offerings, going forward.

When our researchers prevail, and we can finally emerge from our isolation, the world will not look the same — the aftermath of Covid-19 will be felt for years to come. And for the healthcare insurance industry, changes that were either happening slowly or not being considered at all, may be part of a permanent new reality. What some might perceive as challenges, other might as opportunities and adaptation, as always, will separate those who rise from those who fall.

David Healy is the CEO – EMEA at Aetna International