Medical Insurance in Saudi Arabia Mohammed Sadullah Khan

Historically Insurance has been in existence for over three centuries in this world.  Due to its enormous growth it has been classified into various classes depending upon the type and nature of the risk involved.  The major traditional classes of insurances are Medical, Motor, Property & Marine.  It is found that Medical together with Motor forms almost half of the insurance portfolio to the total insurance business. These classes of insurance 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 is being sold for almost over half a century.  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 type of providers have emerged to manage the bulging Medical portfolios, they are Third Party Administrators and Consultants. In Saudi Arabia we have independent TPA and in-house TPA. We also have independent consultant and some times Brokers take the role of a consultant. But the majority of Medical Insurance is being done directly by the Insurers.

NCCI was enjoying the monopoly of being the only registered Insurance Company in Saudi Arabia. But Malath Co-operative Insurance and Re-insurance has broken the monopoly by become 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 of registration.

The decision of the government to regularize Insurance companies under SAMA, was a major decision towards regulation and development of Insurance Industry.  The regulation was a comprehensive one requiring all the players in the market 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 licencing, these companies will be reduced to less than half. The remaining either have closed their operations, will be closing or merged with other companies.

The Motor Insurance was made Mandatory on 20^th November, 2002 fuelling the growth of Motor Insurance. Council of Co-operative Health Insurance was formed on 11/08/1999 to regulate the mandatory medical Insurance.  The first phase of health insurance, which was applicable to over 500 expatriate employees was made mandatory last year and the second phase applicable to over 100 expatriate employees during the early part of April this year.  This has increased the insurance awareness among the entire community.  Even-though the compulsion is for expatriates only but most of the companies are including their Saudi staff under Insurance. The over-all Saudi Insurance market is currently estimated at SR 5 billion. The potential for health insurance alone is more than SR. 20 billion and is expected to be achieved within next few years.

In the past many hospitals and clinics have suffered due to defaulting Insurance Providers. Very recently we have seen the closure of SACIR and Methaq, who were heavily into Medical Insurance.  Millions of riyals were lost by the hospitals 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 the insurance company doctors. These refusal of claims have become bone of contention between the hospital doctors and insurance doctors. The Insurance doctors need to trust the prima facie evidence of the treating doctor. The treating doctors some times end-up being dictated 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 of the staff, who are on deputation basis will have their own international Insurance from the companies in their own country. However if individual want to buy Medical insurance then he will have limited choices.  The cost of health insurance hovers between SR. 800 to SR. 4,500.  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 SR. 250,000, dental coverage, vaccinations as per the MOH, optical and maternity.  The number of exclusions are less and well defined.  The basic room requirement is Semi-private room.  The difficult area is the deductible part which is 20% of the claims amount subject to a maximum of SR. 100.  In this area customers have ended up paying upto SR. 300 due to lack of understanding on various parties involved.  However as the scheme progresses further, the awareness will increase and there will be less 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 rely are not covered under the current wording of CCHI.  There is non-network Saudi Arabia and world-wide 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.

On part of customer, they 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, receptionist is slow, doctor is late or does not prescribe the medicine suggested by the patient and the blame goes to the Insurance Company.  In certain cases genuine problems are faced by the customers.  Certain companies try to seek approval for even small test which will consume the time of the patient and even after wasting the time the net result will be the denial of that particular test. Certain brands of drugs are not allowed by some Insurance companies, hence they suggest the treating doctor to provide with generic names of the drugs.  These generic names of the drug will give leeway for the Pharmacist 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 the 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 Medical insurer and should not be over-looked. As with all the buying processes the universal truth "Caveat Emptor" should not be ignored.

Mr Mohammed Sadullah Khan, an MBA, Fellow of Insurance Institute of India and an Associate of Chartered Insurance Institute of U.K., with more than 20 years of experience in the insurance industry — 12 of which have been in Saudi Arabia, is experienced in all classes of general insurance with special emphasis on property, medical, motor and bancassurance. He can be contacted at mosakhan40@yahoo.com