Health insurance companies in the UAE are seeking to increase premiums across various health policies as compensation claims jumped to 78.2 per cent of the overall premium paid last year.

The drastic jump in the claims, which were at 60.5 per cent in 2009, coupled with other expenditures like payment to brokers and cost of operation, leave too little for themselves, claim the insurers.

“The expenditure of the insurance firms is not limited to the payment of claims, we also have to pay up to 20 per cent of the policy price to brokers and add to this our operating cost, then we are left only with peanuts,” revealed a representative of an insurance company.

Payment of non-documented claims, continuation of treatment etc. also contribute to the shrinking profit margins in this sector.

The insurance companies in the UAE paid a whopping Dh3.612 billion in compensation against Dhs4.622 billion of the total premiums earned, bringing the rate of compensation to about 78.2%.

The stats were revealed by the Emirates Insurance Commission, showing that the health insurance sector paid the highest compensation when compared to other sectors.

Dr. Hazim Al Madhy Executive Vice President and Director of Medical Insurance depatment at Oman Insurance Company said that profit margins of most insurance firms are not more than 5 per cent and this could be attributed to at least 20 per cent additional costs to the total compensation paid by insurance companies.

He attributed the rise in compensation and shrinking profit margin to the high cost of health care products and services over the past year, as well as the misuse of high indicators of service and exploitation.

“There is a rising abuse of the system, it turns out that about 70% of laboratory tests and analysis was not needed.”

Abdul Latif Abu Qoura General Manager of Dubai Insurance said that the profit margins would continue to shrink unless the prices of medical supplies and services don’t come down or “We will have to increase the price for the insurance coverage.”

He urged the Ministry of Health to issue proper directives as regards the wages and cost of health services. “A rise in the prices of insurance policies is not in the interest of the consumers, hence the ministry should step in and contain rising cost.”