The compulsory health insurance law, which is expected to take effect in May 2022, could generate an additional QR1bn to QR1.5bn in gross written premiums (GWP) in Qatar in the coming years, according to Standard & Poor's (S&P).
"We estimate that the (mandatory) scheme could generate QR1bn-QR1.5bn in additional GWP in the coming years," S&P said in a report.
The Qatari government approved a compulsory health insurance law, expected to take effect in May 2022. Under the law, all foreign visitors, residents, and workers in the country will have to hold medical insurance for the entire duration of their stay, unless they are exempt.
However, the rating agency has not incorporated the GWP growth forecast for 2022, since no details about the potential volume have been disclosed.
In the meantime, the agency anticipates that higher public expenditure to diversify the Qatari economy and further preparation for the 2022 FIFA World Cup will contribute to GWP growth in 2022.
"In 2021, we estimate combined ratios of 90%-92%, after just below 90% in 2020. We then expect combined ratios to converge closer to about 95%, potentially between 93%-96%, as the proportion of medical business increases, which tends to have lower profit margins," it said.
The new scheme will replace an earlier scheme (SEHA) which was disbanded in 2015. The new system was promulgated under Law No. 22 of 2021 regulating the health services in Qatar.
According to a law firm Clyde and Co, the new scheme appears to envisage private insurers that are approved by the Ministry of Public Health (MoPH) being authorised to offer prescribed minimum levels of cover as set out by the scheme. The MoPH is likely to play an additional role as a regulator of the health insurance services.
All non-Qatari residents and visitors in Qatar must have private health insurance for the duration of their stay to receive basic medical services.
The report also said profitable earnings and robust capital buffers continue to support rated Gulf Co-operation Council (GCC) insurers’ credit profiles. However, potentially more volatile capital markets and ongoing intense competition will increase pressure on earnings in 2022.
The region’s ongoing economic recovery from the Covid-19 pandemic, thanks to higher oil prices, government spending, and increasing activity in the non-oil sector, will also boost insurers’ growth prospects, it said, estimating further capital build up in 2022, but at a slower pace than in previous years when insurers benefited from stronger earnings.