Compulsory health insurance across Dubai and Qatar means that premium income is growing rapidly, but there are concerns about the opportunities for the private market and profitability in the medium to long term.

Ambitious plans for compulsory health insurance schemes are well under way. In Qatar, the first phase of its scheme was launched in July 2013, and the UAE has started the rollout of compulsory health insurance in Dubai over the next three years.

However, the private market may struggle to offer mandatory health cover, and its performance may be hindered by the strict regulations surrounding new products. In Qatar, the national health insurance company will be the only provider of the basic level of cover. In Dubai, only a select number of insurers will be appointed to offer the basic cover.

A wide range of benefits are prescribed and premiums for low-salary workers are capped by a fixed index rate which, together with high levels of anticipated claims, could narrow the margins of participating health insurers. This is likely to be particularly true for smaller insurers, while larger players would benefit from their scale advantages resulting from superior claims management, strong provider networks and capacity to cross-sell other products.