Why Did Our Company Medical Insurance Premium Increase in the UAE?

Why Did Our Company Medical Insurance Premium Increase in the UAE?

Reviewed by Samuel Douglas, Head of Insurance, Beneple

If your company medical insurance premium has increased at renewal in the UAE, the most common reasons are claims experience, medical inflation, changes in employee demographics, plan design and the insurer’s pricing approach.

For larger corporate schemes, claims can be particularly important. If employees have claimed significantly more during the year — especially if there have been one or more high-cost medical cases — this can affect the insurer’s view of the risk and the renewal premium.

But a higher renewal does not automatically mean you should reduce employee benefits or accept the first price offered.

Understanding why the premium has increased is the first step.

Why do corporate medical insurance premiums increase in the UAE?

There is rarely one single reason.

When an insurer calculates a corporate medical insurance renewal, it may consider several factors, including:

• Claims made by employees and dependants
• The company’s claims or loss ratio
• High-cost medical cases
• Medical inflation
• Changes in the age and profile of employees
• The number of dependants covered
• Hospital and clinic network
• Geographic area of cover
• Benefits and annual limits
• The insurer’s own pricing and appetite for the business

Some of these factors are outside an employer’s control.

Others can be reviewed, negotiated or redesigned.

This is why employers should look beyond the percentage increase and ask:

What is actually driving our renewal?

What is a medical insurance loss ratio?

A medical insurance loss ratio broadly compares the amount an insurer has paid in claims against the premium it has received.

For example, if a company has paid AED 1 million in medical insurance premiums and claims are running at AED 700,000, the claims-to-premium relationship is very different from a company where claims have reached AED 1.5 million.

The loss ratio is not the only factor used to calculate a renewal, but for many corporate medical insurance schemes it is an important one.

A higher loss ratio can put upward pressure on renewal pricing.

That is why employers should understand their claims experience before renewal terms arrive rather than discovering it when the new premium is presented.

Can one employee's medical claim increase the whole company's insurance premium?

Potentially, yes.

One large medical claim can have a significant effect on the overall claims experience of a corporate medical insurance scheme, particularly in a smaller or medium-sized group.

A serious diagnosis, major surgery or prolonged treatment can generate a level of claims that is significant compared with the total premium paid by the company.

As Samuel Douglas, Head of Insurance at Beneple, explains, one expensive medical case can sometimes change the claims picture for an entire group.

That does not mean the employee has done anything wrong.

Medical insurance exists precisely because people sometimes need expensive treatment.

The issue for the employer is understanding how that claim has affected the overall scheme and how the insurer has reflected it in the renewal.

For a larger company, one claim may be diluted across a much bigger insured population. For a smaller group, the same claim can have a proportionately greater impact.

Does a high loss ratio always mean our premium will increase?

Not necessarily.

Claims experience is important, but it is only part of the renewal calculation.

An insurer may also consider:

• Previous years' claims performance
• Current employee demographics
• Changes in headcount
• Dependants
• Benefit levels
• Provider network
• Medical inflation
• The insurer's appetite for the business
• Competition from other insurers

This is why a renewal should not simply be treated as:

“Our claims were high, therefore this is the price.”

A good corporate medical insurance broker should be able to explain the insurer's reasoning, assess whether the proposed increase is justified and explore what alternatives are available.

What is medical inflation and how does it affect UAE health insurance?

Medical inflation is the increase in the cost of healthcare over time.

Hospital treatment, consultations, diagnostics, medication and other medical services can become more expensive even when the number of employees using the insurance has not changed.

Insurers therefore build expected increases in healthcare costs into their pricing.

This means a company can potentially experience a premium increase even if its own claims have been relatively stable.

Claims experience and medical inflation are different things, and HR and finance teams should understand how much each is contributing to a proposed renewal.

Can employee demographics affect the medical insurance renewal?

Yes.

The profile of the insured population can influence medical insurance pricing.

If your workforce has changed significantly during the year, your renewal may not be based on exactly the same risk profile as the previous year.

Changes may include:

• Average employee age
• Number of employees
• Number of dependants
• Family composition
• Geographic location
• Different categories of cover

This is one reason an insurance programme that suited a company several years ago may no longer be the right structure today.

As a business grows, the medical insurance should be reviewed with it.

Should we change insurer if our medical insurance renewal increases?

Not automatically.

Moving insurer can sometimes produce a better result, but the cheapest alternative is not always the best option.

Before moving, compare the policies properly.

Look at:

• Hospital and clinic network
• Annual limits
• Co-payments
• Geographic coverage
• Maternity benefits
• Dental and optical benefits
• Mental health cover
• Pre-existing and chronic-condition terms
• Policy exclusions
• Employee support
• Claims administration

A quotation that is 10% cheaper but removes hospitals regularly used by your employees may not represent a genuine saving.

The objective should be to find the right balance between cost, cover and employee experience.

Can an insurance broker negotiate a corporate medical insurance renewal?

Yes.

A corporate medical insurance renewal should be reviewed and negotiated rather than simply accepted.

A broker can analyse the existing scheme, discuss the renewal with the insurer, approach alternative insurers where appropriate and model different options.

That may include looking at:

• Whether the existing insurer will reconsider its terms
• Alternative insurer quotations
• Different network options
• Changes to geographic coverage
• Underused benefits
• Co-payments and deductibles
• Different benefit levels for different employee groups
• Policy consolidation

The answer should not automatically be to cut benefits.

Sometimes there are structural changes that reduce unnecessary cost while preserving the benefits employees actually use.

When should a UAE company start preparing for medical insurance renewal?

Ideally, around 90 days before the policy expiry date.

Waiting until renewal terms arrive can leave very little time to understand the claims, consider alternative structures and obtain meaningful competing quotations.

Starting earlier gives your HR, finance team and broker time to:

1. Review claims and utilisation data
2. Understand what is driving the renewal
3. Review changes in the workforce
4. Identify benefits employees actually use
5. Assess whether the current plan still fits the business
6. Approach the insurance market if necessary
7. Negotiate with the incumbent insurer
8. Communicate any changes to employees before renewal

Renewal terms often arrive relatively close to the policy expiry date.

The work that gives you negotiating options should therefore start before the renewal quote lands.

What claims information should we ask our insurance broker for?

Ask your broker what claims and utilisation information is available for your company and how it affects your renewal.

Useful questions include:

What is our current claims or loss ratio?

Which types of claims are driving our costs?

Have there been any unusually high-cost cases?

How does our current claims experience compare with previous years?

Which benefits and providers are employees actually using?

Are we paying for benefits or geographic cover that employees rarely use?

What is the insurer attributing the renewal increase to?

The aim is not simply to receive a spreadsheet.

Your broker should help you understand what the data means and what, if anything, you can do about it.

How can companies reduce medical insurance costs without cutting employee benefits?

There is no single answer, but there are several areas worth reviewing.

For example, an employer may discover that it is paying for a provider network much broader than employees actually use.

Another company may be paying for worldwide medical cover for its entire workforce when only a small group requires it.

Other businesses have multiple separate policies that could potentially be consolidated.

The important thing is to work from your company's own data.

Reducing benefits purely to achieve a lower premium can create a false saving if employees lose access to hospitals, treatments or benefits they value.

The better question is:

Are we spending our medical insurance budget in the right places?

Watch: How one high-cost claim can affect a medical insurance renewal

In this episode of Made in Dubai, Spencer Lodge speaks with Samuel Douglas, Head of Insurance at Beneple, about how corporate medical insurance really works in the UAE.

For this topic, jump to:

43:00 — The single expensive claim that can change an entire team's renewal

Frequently asked questions about UAE medical insurance renewals

Why did our company medical insurance premium increase?

Corporate medical insurance premiums can increase because of claims experience, medical inflation, changes in employee demographics, benefit design and insurer pricing. For many larger corporate schemes, claims and the company's loss ratio can be significant factors.

Can one large medical claim affect our corporate insurance renewal?

Yes. A high-cost medical claim can materially affect the overall claims experience of a corporate scheme, particularly where the insured group is relatively small.

What is a loss ratio in medical insurance?

A loss ratio broadly compares the claims paid by an insurer with the premium received for the policy. It is one of the measures insurers may use when assessing corporate medical insurance performance and renewal pricing.

Does medical insurance go up every year in the UAE?

Medical insurance premiums often increase because healthcare costs and medical inflation rise over time, although the amount of any increase will depend on the company's claims experience, employee profile, existing benefits and insurer pricing.

Can a broker reduce our medical insurance renewal?

A broker cannot guarantee a lower premium, but they can analyse the renewal, negotiate with the existing insurer, obtain alternative quotations and review the structure of the plan to identify potential savings or better value.

Should we change insurers if our renewal is expensive?

Not necessarily. Compare the proposed renewal with alternative options, but make sure provider networks, benefits, exclusions and employee experience are compared like-for-like rather than choosing purely on price.

How early should we start a medical insurance renewal in the UAE?

Around 90 days before expiry is a sensible starting point for many companies. This allows time to review claims and utilisation, assess the current plan, test the insurance market and negotiate before the existing policy expires.

What should HR ask a broker at medical insurance renewal?

Ask what is driving the increase, what your claims experience looks like, which benefits employees use, what alternatives have been considered, how the renewal has been negotiated and what changes could reduce cost without unnecessarily reducing cover.

Don't wait for the renewal increase to understand your medical insurance

The worst time to discover that your company has a difficult renewal is when the renewal quotation arrives.

Corporate medical insurance should be monitored throughout the year — not simply reviewed a few weeks before expiry.

At Beneple, we work with UAE businesses to arrange and manage corporate medical insurance throughout the year, including claims support, policy administration, renewal analysis, insurer negotiation and employee wellbeing.

If your corporate medical insurance renewal is approaching, we can review your existing plan and help you understand what is driving the cost.

Talk to a UAE-licensed corporate medical insurance broker.