Surge in Medical Insurance
Historically Insurance has been in existence for over three centuries in this world. Due to its enormous growth, it has been classified into various classes depending upon the type and nature of the risk involved. The major traditional classes of insurances are medical, motor, property & marine. It is found that medical together with motor constitute almost half of the insurance portfolio of the total insurance business. These classes of insurance are also known as attrition class of business as losses do occur with regular frequency. Medical insurance is more prone to attrition than any other class of insurance.
In Saudi Arabia, insurance sector has been poised for rapid growth and the major growth will be in the area of health insurance since the government has started applying cooperative health insurance scheme to expatriates working in the private sector. This scheme is being applied to expatriate workers and their families in three phases. In the first phase, companies which employ 500 or more employees are obliged to implement the scheme for their expatriate staff. In the second phase, the scheme is applied to expatriate employees in companies employing more than 100 foreigners. In the third phase, it is applied to all companies and all expatriates including domestic servants. Lately, the government has decided that expatriate workers must have health insurance coverage for the application and renewal of their Iqamas (resident permits). This decision has given a fresh boost to the Kingdom's health insurance sector.
The cooperative health insurance scheme was approved by the Council of Ministers in 1999 with the objective of regulating the mandatory medical insurance and to reduce government expenditure in the health sector. The overall average expenditure in the Saudi health sector amounts to SR 37.4 billion per year, of which 29.9 billion is government expenditure and the remaining SR 7.5 billion is accounted for by the private sector.
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