Daman health insurance shake-up could impact up to half a million UAE expats

The Abu Dhabi government-backed insurance company is changing its so-called 'enhanced' plans in what represents the biggest single change in seven years.

Insurers in the UAE have come under increasing cost pressures because of competition for customers and medical inflation. Ryan Carter / The National

Daman is revamping its health insurance policies in a move that could affect almost half a million expatriates.

The Abu Dhabi government-backed insurance company yesterday revealed it was changing its so-called "enhanced" plans in what represents the biggest single change to its policy structure since its launch seven years ago.

Daman confirmed that it would not introduce changes to its existing base enhanced plan and that companies will be able to renew their existing policies with the same benefits under the new product names.

But the system will allow companies a greater degree of flexibility to add or remove benefits for staff.

Intense competition has meant that many insurers have opted to reduce policy benefits to avoid having to raise the cost of products.

"Our clients now will have more freedom in choosing optional benefits and economising their plans through a number of cost optimisation options," said Dr Sven Rohte, the chief commercial officer at Daman, in response to questions from The National.

Previously, expatriate insurance plans offered by Daman fell into a broad "enhanced" category. Now that has been carved into three main subcategories differentiated by benefits offered and coverage limits, ranging from Dh300,000 to Dh5 million. Companies can add additional benefits such as dental or optical services.

Insurers in the UAE have come under increasing cost pressures because of competition for customers and medical inflation that has forced some to sell policies below their real cost.

"With the new plans and options, companies will have more control on designing a policy that suits their needs and budgets," said Dr Rohte. "The flexibility on offer makes it possible for them to control the premium rates and, depending on the changes they make, potentially generate a saving compared to their existing plans."

Outpatient medical inflation has been running at an average of 26 per cent a year since 2007, according to Daman data.

This month Standard & Poor's warned that overcapacity and competition were starting to harm the UAE's Islamic insurance sector.

"The Gulf Cooperation Council insurance markets are now overpopulated with insurers. This is giving rise to overcapacity with the predictable, and expected, response of price competition in the insurance market," said the ratings agency in a report.

Daman insures more than 2.4 million members - including 465,300 expatriates covered by existing enhanced plans.