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Sunday, November 25, 2007

Medical Insurance in Saudi Arabia

Monday, 11 June 2007

ENORMOUS growth of the insurance business over the past three centuries has led to its various classifications today, depending upon the type and nature of the risk involved. The major traditional classifications are medical, motor, property and marine. It is found that medical and motor together form almost half the total insurance business portfolio. These classes are also known as attrition class of business as losses do occur with regular frequency. Medical insurance is more prone to attrition than any other class of insurance.
In Saudi Arabia, insurance has been sold for almost half a century now. In the recent past, medical insurance was being written by medical insurance companies, general insurance companies and life insurance companies. There are international brokers, local brokers and agents also selling medical insurance. Other types of providers have emerged to manage the bulging medical portfolios: Third Party Administrators (TPA) and consultants. In Saudi Arabia we have independent TPA and in-house TPA. We also have independent consultants, and sometimes brokers take the role of a consultant. But the majority of medical insurance is being done directly by insurers.
The state-owned National Company for Cooperative Insurance (NCCI) was enjoying a monopoly as the only registered insurance company in Saudi Arabia. But Malath Cooperative Insurance and Reinsurance has broken the monopoly by becoming the first among non-NCCI companies to be registered.
However, this is a new company with very little experience in the insurance industry. There are many seasoned companies along with the new entrants awaiting clearance for registration.
The decision of the government to regularize insurance companies under the Saudi Arabian Monetary Agency (SAMA), was a major step towards regulation and development of the sector. The regulation was a comprehensive one requiring all the market players to get the necessary licence to operate with the minimum fees and deposits. Prior to the current regulation, there were more than 80 insurance companies operating in the Kingdom.
However, post licensing, these companies will be reduced to less than half. The remaining either have closed their operations, will be closing, or merged with other companies.
Motor insurance was made mandatory on Nov. 20, 2002, fuelling the growth of motor insurance.
The Council of Cooperative Health Insurance (CCHI) was formed on Aug. 11, 1999 to regulate the mandatory medical insurance.
The first phase of health insurance, which was applicable to companies employing more than 500 expatriate employees was made mandatory last year and the second phase, applicable to those having more than 100 expatriate employees, during the early part of April this year.
This has increased insurance awareness among the entire community. Even though compulsory medical insurance is for expatriates only, most companies are including their Saudi staff for coverage.
The overall Saudi insurance market is currently estimated at SR5 billion. The potential for health insurance alone is more than SR20 billion, which is expected to be achieved within the next few years.
In the past, many hospitals and clinics have suffered due to defaulting insurance providers. Very recently, we saw the closure of SACIR (Saudi Allied Company for Cooperative Insurance and Reinsurance) and Methaq, who were heavily into medical insurance.
Hospitals lost millions of riyals due to unpaid bills by these operators. The current regulation will protect the interest of all parties involved in insurance.
Many hospitals are not happy with evaluation of claims by insurance-company doctors. Their refusal of claims has become the bone of contention between hospital doctors and insurance doctors. Insurance doctors need to trust the prima facie evidence of the treating doctor.
The treating doctors sometimes end up being dictated to by the insurance doctors and end up losing their professional independence.
There are many companies specializing in Medical Health Insurance in Saudi Arabia. For groups, it is easy to get insurance. Some staff, who are on deputation basis, will have their own international insurance from the companies in their own country.
However, if an individual wants to buy medical insurance, then he will have limited choices. The cost of health insurance hovers between SR800 to SR4,500. The main factors built into rating are sum insured, room type, network of hospitals, dental, pre-existing, repatriation of mortal remains, optical, maternity, international coverage, age of the insured, deductible, claims experience and group size etc.
Current basic CCHI coverage is standardized to make the insurance uniform and it has certain inherent advantages like compulsory coverage to a limit of SR250,000, dental coverage, vaccinations as per the Ministry of Health, optical and maternity. The number of exclusions are few and well defined. The basic room requirement is semi-private room.
The difficult area is the deductible part, which is 20 percent of the claims amount subject to a maximum of SR100. In this area, customers have ended up paying up to SR300 due to lack of understanding on the part of various parties involved.
However, as the scheme progresses further, the awareness will increase and there will be fewer mistakes. Insurance companies have already found a way to beat this deductible issue by issuing policies with fixed deductible.
The basic intention of the CCHI coverage is to take care of treatment in Saudi Arabia, hence some of the areas on which a general expatriate patient relies are not covered under the current wording of CCHI - there is non-network Saudi Arabia and worldwide exclusion unless the treatment is emergency in nature.
Medical insurance is still in evolutionary process and it may take some more time till it stabilizes.
Customer should realize that everything is not insurable and there are always some gaps in the insurance. Too often it has been found that the customer either does not get the expected service, the receptionist is slow, the doctor is late or does not prescribe the medicine suggested by the patient and the blame goes to the insurance company.
In certain cases, customers face genuine problems. Certain companies try to seek approval for even a small test, which will consume the time of the patient, and even after wasting the time, the net result will be denial of that particular test.
Some insurance companies do not allow certain brands of drugs, hence they suggest to the treating doctor to provide with generic names of the drugs. These generic names of the drugs will give the pharmacist leeway to give the drug of his choice or the synonymous drug of cheaper variety, thereby causing dissatisfaction to the customer.
Apart from the factors mentioned above, the buyer should look into the strength of the company, its affiliation, flexibility and its payment record with hospitals. Buyer should also be aware of any fine prints, inner limits, geographical scope, non-network coverage, limitation of claim submission, general exclusions and practical difficulties before making any decision to go ahead with a particular policy.
A 24-hour helpline is certainly a useful aspect of service by the medical insurer and should not be overlooked. As with all the buying processes, the universal truth "Caveat Emptor" should not be ignored.
Courtesy - Mohammed Sadullah Khan, an MBA, is a Fellow of Insurance Institute of India and an Associate of Chartered Insurance Institute of the United Kingdom. He has more than 20 years of experience in the insurance industry - 12 of them in Saudi Arabia. He is experienced in all classes of general insurance with special emphasis on property, medical, motor and bank assurance. He can be contacted at


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