Dubai passes mandatory health insurance law with 3-year rollout

DUBAI - Dubai's ruler has approved a law requiring all employers in the emirate to purchase health insurance for their expatriate staff, a move expected to boost healthcare spending by its 2.2 million residents considerably.

The law - the full text of which has not been published - will be rolled out within three years and will make employers responsible for providing at least an "essential benefits package" for every worker.

It will be rolled out in several phases by 2016, the Dubai Health Authority said in a statement on Wednesday.

The government will remain responsible for the coverage of local citizens, who are estimated to make up less than a fifth of the population.

Insurance companies will need to secure a special permit from the Health Authority in order to issue policies.

According to official estimates, only 40-50 per cent of Dubai's residents are covered by government and private health insurance schemes today.

Although it is unclear how much the required insurance policy will cost, Dubai-based Arqaam Capital estimates patient claims in Dubai will more than triple by 2016 to 4.8 billion dirhams (S$1.64 billion) from 1.3 billion dirhams (S$443 million) a year today.

"We see a medium-term positive for NMC Health, Al Noor Hospitals, and to a lesser degree insurance underwriters in Dubai," Arqaam Capital said.

It said, however, that it was not changing its ratings for the companies' shares, which are "buy" for NMC Health and "hold"for Al Noor Hospitals.

Dubai's neighbour Abu Dhabi introduced mandatory health insurance in 2007, with patient claims quadrupling as a result.

Arqaam Capital said the move could also spur growth in hospital bed capacity. The United Arab Emirates has 1.9 beds per 1,000 residents while the global average is 3.0 beds and that for developed countries is 5.5 beds, it said.