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  • April 2021
  • 5 minutes

Growing Pains? Balancing Opportunity and Options in the Health Markets of the Middle East

  • Dr. Dennis Sebastian
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In Brief

After a torrid compound annual growth rate of 43% since 2013, the Middle East health insurance market is experiencing growing pains, including challenges to sustainability and profitability. A new survey from RGA identifies causes and solutions.

Consider the health market’s concentration and customer base: Gross Written Premiums (GWP) for health insurers in Gulf Cooperation Council (GCC) countries account for 44% of total GWP, with the non-life sector, including motor insurance, comprising the remainder. Yet, the scale of the health market can be deceiving. Two nations – the United Arab Emirates and Kingdom of Saudi Arabia – dominate the Middle East market for health protection products. In both, such coverage is compulsory for expatriates, fueling its expansion.

With the imminent implementation of compulsory health insurance in other GCC countries and privatization of the social health insurance infrastructures, the sector is expected to continue growth northwards.

How are health insurers in the region managing the market’s rapid expansion amid challenges of a growing chronic disease burden and increasing cost of health services, to name a few? In late 2020, RGA conducted a comprehensive survey of 21 of the largest health insurers in the region to learn more, focusing predominantly on the United Arab Emirates (UAE), Bahrain, Oman, and Qatar.

One conclusion: after a torrid compound annual growth rate of 43% since 2013, the Middle East health insurance market is experiencing growing pains, including challenges to sustainability and profitability. Survey respondents identified issues ranging from soft market conditions and underwriting discipline to rising fraud, overutilization, and data management problems.

So, how can insurers keep the health market … healthy? RGA’s survey reveals a growing need for real-time, transparent access to data across all functions of the health insurance service chain. By investing in state-of-the-art capabilities, insurers can better enable proactive management, timely intervention, and data-driven benefits management to support payors’ risk management strategies and bring increased profitability to the sector.

Trends in Risk and Benefits Management of Middle East Insurance Plans 2020



Outsourcing Claims Opportunity

The factors fueling growth are numerous, and include product innovation, benefit differentiation, customer service improvement, broadened digital distribution footprints, and enhanced marketing and underwriting. However, successful outcomes were most closely linked with improved management across the insurance value chain, from pricing and underwriting to provider, claims, and data management. A good number of these functions continue to be outsourced to Third Party Administrators (TPAs).

The GCC has proven to be fertile ground for TPAs  for a variety of reasons. Survey respondents identified the sheer size of the opportunity; a lack appetite and/or expertise to manage the business; the perception that better provider discounts can be achieved only from TPAs; and the ability to pursue more volume-based revenues.

When it comes to managing claims, the task falls both to in-house departments or is outsourced TPAs. Approximately 65% of respondents who reported using TPAs rely on these administrators to handle multiple services, including claims management, network access, administration, and IT services. And approximately 35% of respondents report using TPAs for all areas.

This arrangement brings many benefits, according to survey participants. Respondents indicated that TPAs are most effective at providing health network access and management to health insurers, earning a 74% ranking for satisfaction. Online access to experience data garnered the second-highest satisfaction ranking at 67%, followed by case management (63%), experience analysis and reporting (51%), and medical cost management (48%).

Risks of Overreliance

Still overreliance on TPAs carries risks. Survey respondents reported dissatisfaction with TPAs over a failure to provide services to prevent poor health outcomes, maintain good health, and improve diseased health states; and a lack of insurance-linked wellness services. Nearly half of respondents indicated that these programs were not being offered, nor were value-added proactive gatekeeper initiatives (44%), preventive health initiatives (41%), and lifestyle management (40%). Every percentage saved in health claims costs adds considerable value to the bottom line, but RGA’s survey suggests a growing sentiment that more proactive claims management is necessary.

Building in-house expertise could help address this preventative care gap for more sustainable cost management. Insurers reported in-house claims teams offered superior medical management (with a top ranking of 43%) and achieved greater cost management efficiency. Still, survey respondents identified several operational pain points for in-house claims teams as well, including a lack of reporting transparency and controls, delays in submissions and reconciliations, and problems in network management and cost creep. The survey suggests a need to build additional capacity and balance in-house and TPA capabilities to support insurers’ risk management strategies.

Managing a Changing Market

Growth is never inevitable, but survey respondents remained upbeat and confident about the long-term prospects for health insurance growth in the GCC. When asked to rank overall risks, survey respondents viewed shrinking margins as the most significant threat and also cited evolving regulations. Respondents also identified multiple market catalysts, including:

  • Compulsory health insurance in the Kingdom of Saudi Arabia and United Arab Emirates, and its imminent launch in Bahrain, Oman, Kuwait, and Qatar,
  • Privatization of the social health insurance models,
  • Self-insured plans seeking private health insurance, and
  • Specialized products driven by an aging population, chronic diseases, and post-retirement health insurance cover.

Nearly all survey respondents turned to reinsurers to help manage this rapidly changing market and seize market openings. One-third of respondents reported that a need for underwriting support drove reinsurance demand, followed by capital efficiency or relief, the ability to reduce large claim volatility, and technical expertise.

Such partnerships only make sense given the rapid pace of change. The opportunities in the health markets are tangible, but the RGA survey reveals growing challenges, as well. It also seems clear that insurers would benefit by retaining significant control of the key functions of the health insurance value chain to ensure successful outcomes.

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Meet the Authors & Experts

Dennis Sebastian
Dr. Dennis Sebastian

Vice President, Head of Health, RGA Middle East