Oops! Am Insured?

Recently I came across a very interesting blog on medical insurance. Peeling off the US-centricity and Obama-bashing aspects in the piece, the main point that the blogger wanted to drive home is that one shouldn’t purchase insurance after a loss happens.

Before being accused of stating the obvious, a cursory look at some examples (primarily in the private health insurance sphere) in the Middle East, suggests that it might not be that obvious after all! For example, how many inbound calls in insurance call centres would you reckon are from women requesting an alternative or a top-up to their employer financed health insurance scheme which may not cover maternity? Plenty. You’ve probably also already guessed what instigated their call: they are now pregnant. Similarly, how many clients downgrade or switch insurance to a more economical policy only to try reverting back to more quality cover after the emergence of a disease or medical condition that is not adequately covered by the more economical policy? Covering such losses goes against the very essence of insurance. Insurance covers incidents that are, in as far as the insured it concerned at the time of occurrence, accidental in nature.

Let us take a live example. Hypertension and diabetes can trigger kidney problems. In case of kidney failure one can be looking at three dialysis sessions per week at a weekly cost of not less than AED 5,000 (including incidental treatment). Annually this amounts to over AED 250,000.Gulf News reported in 2009 that a public hospital in Dubai started turning down expatriate patients due to lack of space. On individually underwritten medical plans (or ones excluding pre-existing conditions) it is likely that an applicant would be refused cover by an underwriter for such treatment if the applicant already suffers from hypertension or diabetes. Within the region there is also an added complication. One’s residence visa generally is tied to one’s employment visa which, in turn, is directly related to one’s health and/or ability to work. If individuals are under an employer’s private medical insurance plan, without the ability to commute this forward, a notice of employment termination/redundancy also results in private medical insurance cover being pulled from under their feet. If under the company scheme they enjoyed the benefit of, for example, pre-existing conditions’ cover, for a new employer and/or insurer this might not be the case anymore.

The foregoing highlights the importance of careful consideration being given by an expatriate employee to one’s private medical insurance as part of their overall personal health management and well-being. Relying on a company health insurance policy may or may not provide the required solution. Health insurance is certain GCC regions is either compulsory or on the way to becoming compulsory. Therefore, economics play a very important role in the decision making process when employers buy private medical insurance for their employees. It is often a tale of two cities or an upstairs-downstairs philosophy, i.e. too much for the patricians and too little for the plebeians. It is therefore important for an employee to understand what cover is available and, if need be, how to supplement this with, say, high-deductible policy, or additional in-patient cover or emergency evacuation (to home country).

Price is not necessarily an indicator of value. The perception of value is personal. For example, if the cost of a medical plan is being driven up by, say, pregnancy / maternity cover and an applicantdoes not require this cover, then the policy should be such that it allows a client to customize according to one’s needs. For example an expensive, high powered, low bodied car may be of little or no value in a 3rd world country. Likewise high out / in-patient treatment covers (or cover being restricted to local / regional treatment or subject to a local network / cost ceiling) may not be half as beneficial to certain expatriate employees as a generous medical evacuation / repatriation cover and the coverage in one’s home country.

Whilst one understands the drive by governments in the region towards compulsory medical insurance for all residents, this is probably only a panacea to reducing public sector spending on medical care. The motive behind it is as much driven by the desire for greater social welfare as was the 2009 decision by a public hospital to turn away expatriate dialysis patients. Medical insurance is fast becoming compulsory in the region because the economics do not currently add up. There is demand, there is supply and there is a scarcity in supply relative to growing demand. None of this equation is about social welfare or personal wellbeing.

Purchasing private medical insurance, on the other hand, is personal. It may be well worth keeping this in mind.

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About insuranceguild

Sharing Knowledge for the Common Good: Many associate guilds with British pre-industrial era. However, predecessors of guilds are found as far back as the 3rd century BC in the Roman Empire. They were also present in various civilizations including Ptolemaic Egypt, India, Iran, China, African dynasties as well as various European countries such as medieval Germany and Italy. A guild is typically an association of practitioners from the same trade. In addition to protecting and developing crafts, trades and business, guilds also helped foster a learning environment among members. Through this platform I wish to share articles of an insurance / risk management nature and hopefully generate comments from readers that would help to enrich my knowledge as well as the knowledge of other insurance and/or risk management practitioners. About the Author: A Chartered Insurance Practitioner by profession, James Portelli is also a Fellow of the UK Chartered Insurance Institute and of the UK Institute of Risk Management and holds an MSc in Risk Management from Glasgow Caledonian University, U.K. James has been active in insurance and risk management since 1990 and in training since 1987. He started his insurance career in general insurance underwriting and agency/broker management with Middlesea Insurance plc (also forming part of the company's Risk Management Implementation Committee and assisting in captive insurance development). He first moved to the Middle East in 1998 occupying senior training, technical, consulting, business development, risk management and strategic development roles. James is also a 2008 CII (UK) Morgan Owen Prize Winner and the 2011 IRM (UK) Steve Butterworth Award Holder.
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