Health insurers in the Middle East’s two largest markets – Saudi Arabia and the UAE – will feel the squeeze caused by medical inflation in their profits, according to a report by Fitch Ratings.
The report said that profits for UAE-based health insurers will come under pressure from medical inflation and intense competition. The combined ratio for health insurance in the UAE was 100.1% in 2018, compared to 97.8% in 2017. It added that earnings for health insurers in Saudi Arabia are also highly affected by medical claims inflation, which outpaced recent premiums increases. This was reflected in the loss ratio jumping to 91% and 88% in 2019 and 2018, respectively, from 77% in 2017.
“Health insurance in the UAE and Saudi Arabia has matured in recent years following rapid growth in the past decade,” the report said. “However, we expect significant growth of over 8% of total premiums in Saudi Arabia in the medium term following the introduction of health insurance linked to visas for religious visitors from abroad.”
Fitch expects that implementation of compulsory health insurance in many countries will drive growth across the region.