Only a quarter of small businesses in the UAE offer their employees health insurance – despite the fact that providing coverage for workers is now mandatory in Abu Dhabi and will shortly become compulsory in Dubai.
Twenty-four per cent of small and medium-sized enterprises have enrolled their employees in health insurance programmes, while a further 24 per cent said they would be in the market for insurance in the next 12 months, according to a poll of 700 businesses in Abu Dhabi, Dubai and Sharjah.
This means that more than half of SMEs do not offer their employees health insurance – and do not plan to even after the deadline for compliance with the Dubai law expires at the end of next June. The government relies on employers to fund health insurance for residents in the private sector.
“SMEs remain significantly under-insured, either because they can’t afford to insure workers or because they have done a risk assessment and don’t believe it’s worth the investment,” said John Katsabanis, the head of marketing at the educational consultancy Potential, which conducted the survey. He was speaking on the sidelines of the SME Toolkit 2015 Global Partner Conference in Abu Dhabi, hosted by the Khalifa Fund for Enterprise Development and the International Finance Corporation.
Dubai introduced a health insurance law in February last year with three deadlines for employers to provide coverage. Companies that fail to provide health insurance by the relevant deadline could face fines of up to Dh500,000. The Dubai Health Authority has also said that it will refuse to issue or renew work visas to employees who do not have health insurance coverage.
Public sector firms and private companies with more than 100 employees are currently required to provide their employees with health care in Dubai.
In Abu Dhabi, health insurance became mandatory in a 2005 law. Companies in Abu Dhabi that do not offer employee health insurance can face fines of Dh10,000 per worker. Sharjah does not require private companies to offer its employees health insurance.
Because of the size of the SME sector, these figures suggest that large numbers of UAE workers do not get health insurance through their employers. SMEs account for 86 per cent of private sector employment in the UAE, according to government figures. The public sector had 436,000 employees in 2008, compared to a population that year of 6.8 million; 2008 is the most recent year for which government figures are available.
Insurance Authority data suggests that large numbers of people remain without health insurance. In 2013, the most recent year for which data is available, 4.4 million people had health insurance, compared to a population of 9.3 million people. That data does not account for the effect of Dubai’s insurance law, however.
Because the law does not currently require SMEs to provide health insurance for employees, “Most of [the SMEs without health insurance] will be in Dubai,” said Ivor McGettigan, a partner at the law firm Al Tamimi and Company. “But in eight months, they will have to get health insurance. Small entities will struggle to avoid complying.”
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