This Article reviews the legal framework of Oman’s health insurance sector in the light of recent legislation and reflects on possible future developments. Oman Sultani Decree No. 44/2021 (“SD No. 44”), amends Oman Law No. 12/79 Promulgating the Insurance Companies Law (the “Insurance Law”) and came into force in June 2021. It constitutes another strategic development of the health insurance industry in Oman. The main amendment introduced by SD No. 44 sees the re-distribution of insurance classes, where health insurance is now classified as a line of business totally independent of the general insurance class. Concurrently, Oman Sultani Decree No. 45/2021 came into force, amending the Takaful law No. 11/2016 (the “Takaful Law”) introducing the Health takaful as a separate class from other takaful classes. SD No. 44 (and SD No. 45) highlight how keen Oman is to further develop the health insurance sector in light of its significant economic and social impact and sensitive nature.
When His Majesty the Late Sultan Qaboos bin Said came to the throne in 1970, an era of political, social, and economic reform was launched, opening and welcoming business opportunities. Insurance companies benefited from this reform and expanded alongside the growth of the economy. In 1979, the Insurance Law came into force, and was the first national legislation to provide a framework for the regulation of Oman’s insurance sector.
The importance of health care was emphasised on in the Basic Law of the State issued by Law No. 6/2021, which provides in Article 15 that the State guarantees healthcare for the citizens and assistance in case of sickness and disability as well as providing the means of prevention and treatment from sickness and diseases and encourages the establishment of private hospitals and treatment institutions.
The construction of Oman's health system has been financed mainly by the oil and gas revenues. However, the decline in oil prices in 2014 triggered an economic slowdown in Oman (as well as in other GCC countries), with colossal consequences for many sectors, including the health insurance industry. This has forced the State to work on diversifying the economy to ensure growth plans are achieved, which includes the necessity of developing a robust health care system.
The plan for the development of the health insurance sector in Oman passed through three major phases:
The government worked on a major and strategic long-term health policy, known as Health Vision 2050, the first edition of which was published in May 2014. It aims at establishing an efficient, equitable, responsive, and well-organised health system. Among the principles established in the plan is the need to provide quality services, focusing on measurable outcomes, emphasising disease prevention, and keeping up with emerging technologies.
In recent years, the Omani insurance industry has witnessed remarkable growth, mainly within the health insurance industry. This growth is due to various reasons, including the contribution of CMA to increasing public awareness of the importance of health insurance, and the willingness of employers to provide adequate medical benefits and coverage to employees in an attempt to attract and retain talent. However, despite the growth of the health insurance sector, the number of employees in the private sector (nationals and expats) who were provided with health insurance remained low.
UHIP came in the wake of this worrying fact. Additionally, the relatively high and uncontrolled level of insurance premiums, as well as the free treatment of nationals in government hospitals, resulted in low demand for private health insurance policies. With a unified health insurance policy in the market, insured persons will acquire more insurance benefits in exchange for reasonable premiums, all this with the CMA efficiently monitoring and controlling health insurance activities and operations.
UHIP aims to increase the quality of the private sector health insurance by supporting the implementation of proper health financing in the private health sector. It also aims to restrain the pressure on government hospitals and medical centers.
UHIP applies to the employment market and its related parties, which includes the employer, the employee, and employee dependents. It provides both basic and optional benefits coverage, a standard insurance application for the purpose of pre-contractual disclosure, and a standard form of policy schedule.
UHIP comprises of Four Chapters and Five Appendices. Chapter 1 includes the definitions related to the unified insurance policy. Dependents are defined as:
CMA’s Decision No. 98/2019 came into force in December 2019, extending the beneficiaries of the policy to include, in addition to the insured and his or her dependents, household workers working inside or outside houses, such as the driver, the cook, the house help and the like.
Chapter 2 includes a preamble providing a broad interpretation of what constitutes the contract of insurance. The policy and the insurance application are considered one contract. All information, substantial data and common practices in healthcare insurance contracts are also considered the basis of the contract of insurance.
Chapter 2 further sets out the general terms and conditions, including the obligations of the parties. The overall combined limit under the policy is OMR 4,500 per annum. In-patient treatment limits for the policy year have been set at OMR 3,000 and include essential and basic benefits, such as doctors’ fees, medicine, ambulances and admission in hospital. Outpatient treatment is limited to OR 500 and it covers consultancy fees, diagnosis, pharmacy fees and lab tests. Additionally, the Policy includes the cost of repatriating the deceased beneficiary to their country of origin, up to OMR 1000.
Paragraph 10 of same chapter provides that the insured is entitled to request the cancellation of the policy at any time on 30 days’ written notice to the insurer; however, such right remains conditional on the insured concluding another insurance policy where the starting date of coverage must be the day immediately after canceling the previous insurance policy. Notably, the CMA’s purpose of such provision is to ensure a continuous and non-interrupted medical coverage of the insured and its dependents. We note in this respect that Article 5 of the Rules (see below) includes provisions similar to those of Paragraph 10 above (i.e., granting the insured the right to cancel the policy), albeit, without the requirement of concluding another insurance policy. Despite the difference between the provisions of UHIP and the Rules, we still believe that the insured (wishing to cancel the policy) must provide proof of concluding another health insurance policy, as this is consistent with the aim of the regulator to ensure a continuous and non-interrupted coverage to the insured.
Chapter 3 sets out the obligations in respect of claims management. According to this chapter, all claims management systems must be in compliance with the electronic claims systems applicable in Oman. Chapter 4 lists the exclusions of the policy, which includes self-inflicted injuries, pre-existing cases, and use of alternative treatment and medicines.
Appendix 4 sets out the mandatory basic minimum coverage under the Policy, providing two options to the insured based on which premiums will be determined by the insurer.
The Rules sets out the obligations of the various parties of the Health insurance relationship, i.e., insurer, policy holders, insured, beneficiary, third-party administrators, and health services providers. The Rules comprise 6 chapters, being the definitions and general provisions governing the health insurance regulations (Chapter 1), the licensing requirements and conditions (Chapter 2), obligations of the parties, i.e., insurer, insured, beneficiary, third-party administrators (TPAs), and health services providers (Chapter 3), dispute resolution (Chapter 4), administrative penalties for violations (Chapter 5), and fees in respect of provided services (Chapter 6).
Article 3 states that companies are prohibited from exercising health insurance activity unless they obtain a licence from the CMA in accordance with the Rules.
In order to avoid conflict of interests, Article 6 of the Rules provides that no insurer may own, operate or manage a healthcare provider or a third-party administrator, and no healthcare provider may own shares in companies licensed to practise health insurance activities, insurance brokers, agents of insurance companies practicing the same activity or third-party administration companies, except in accordance with the conditions and standards set out by the executive president of the CMA.
Pursuant to Article 12 of the Rules, all relevant parties must adopt the health insurance electronic platform in accordance with the samples and decisions rendered by the CMA in this respect. The purpose of this electronic platform is to ensure an efficient implementation of the UHIP through facilitating the process of the insurance operation (approval requests, verification of insurance coverage, and storage of data), digitalising the private healthcare system and health insurance services and enhancing the supervision of the overall system and the quality of the services offered by providers.
Article 13 of the Rules sets out the required documents for issuing the licence for practicing health insurance activity. Article 14 provides that the CMA will review the application within 60 days of its submission. According to Article 18, the licence will be valid for two years, renewable for similar period or periods.
Article 19 of the Rules sets out the obligations of the insurance relationship parties. One of the most important obligations on the insurer is to contract with a third-party administrator for health insurance claims unless the insurer has a separate system to manage such claims. In view of the third-party administration strategic role, the CMA has issued Decision No. k/34/2020 (dated 19 July 2020) for the regulation of practising the activity of third-party administrator (“Decision No. 34/2020”).
Among the pillar provisions of Decision No. 34/2020 is Article 6, which provides that in order to be granted a licence, the sole purpose of the applicant company must be the activity of third-party administrator. Such condition is set to ensure that the licensed TPA will be fully dedicated to its diligent mission of ensuring a smooth, professional, and fair management of the claims processing.
Article 22 of the Decision No. 34/2020 also provides that the third-party administrator must not own, operate, or manage an insurance company, a healthcare provider, a reinsurance company, or insurance brokers or agents unless in accordance with the conditions and standards set out by the CMA.
By amending the Insurance Law (by virtue of SD No. 44), and the Takaful Law (by virtue of SD No. 45), the CMA aimed at strengthening the health insurance sector in Oman. In fact, SD No. 44 highlights the evolution process and the continuous development of the health insurance industry, which started effectively with the UHIP and the Rules.
Additionally, the emergence of new global diseases, particularly COVID-19, has caused in a health crisis which has heavily impacted and harmed the healthcare infrastructure and the economy, and increased treatment costs for individuals. This has prompted the CMA to issue a Circular (Circular No. 579/2020 dated 31 May 2020), requiring insurance companies to cover the costs of medical tests and treatment of the insured persons infected by COVID-19.
SD No. 44 has amended Articles 1 and 42 of the Insurance Law, added new sections to Articles 1, 4 and 38 and repealed Article 61.
The new Article 1 of the Insurance Law has re-categorised insurance into three classes, being general insurance, health insurance and life and savings insurance. Article 1 (Paragraph 2) further divides health insurance into three categories as follows:
We note that the worker compensation activity was also mentioned as part of the general insurance categories (Article 1, Paragraph 1). It is not clear what the reason is behind mentioning this specific insurance activity in two classes, noting that from an insurance perspective, worker compensation normally falls within the general insurance class. We also note that personal accident insurance is also mentioned as part of general insurance, while from the insurance perspective, such activity falls under life insurance (Life and PA).
One of the reasons behind including the worker compensation and personal accident insurance under the health insurance category might be that the CMA aim to include all types of insurance risks related to an insured person’s life and health under one class (except life insurance), and therefore, have better control of all these risks.
Within this same spirit, and as mentioned above (Decision No. 98/2019), the CMA has under UHIP expanded the category of the individuals benefiting from the insurance coverage.
Under Article 2 of SD No. 44, the words (general insurance) will be replaced by the words (general insurance or health insurance) wherever it is mentioned in the Insurance Law. This amendment reflects the new segregation and the differentiation between general insurance and health insurance.
A new article bearing Number 4 (bis) has been added to the Part II of the Insurance Law, stating that:
“The same fees set on the total direct premiums for General insurance in respect of financing the Insurance Emergency Fund, supervision and control will apply on the total direct Health insurance premiums. All the guarantees and financial accounts requirements applicable on the General insurance will also apply on health insurance policies, and which must be submitted separately under the name of ‘Health insurance group.’”
This new addition also reflects the new segregation between general and health insurance classes.
Another new article bearing Number 38 (bis) is added to Part V of the Insurance Law stating that “the CEO of the CMA will issue a decision for the regulations of the Health insurance companies activities.”
SD No. 44 represents a significant step towards taking the insurance industry to a higher level of regulation and quality of services by the insurers. The fast growth of the health insurance industry and the increasing prominence of the health insurance sector required a response by the CMA, which was reflected in SD No. 44 (and SD No. 45). The distinguished and sensitive nature of the health insurance sector lies mainly in the financial requirements for the insurers, thus, the necessity to increase financial and personnel capabilities of the insurers to provide the needed insurance protection to the insured persons. To fulfill those requirements, the regulator needs to be proactive in constantly providing legislative updates in compliance with the international standards of regulation, with the aim of providing quality services by the insurers to the insured persons, and as a result , a fair health insurance market.
The continuous development of the health insurance sector should attract international investment and encourage international health care providers to come to Oman. The growth of the health insurance sector will encourage foreign insurers and underwriters to join the growing market. Consequently, health insurance activity will contribute to economic growth, provide quality insurance coverage and health services in Oman, as well as create job opportunities.
With the significant growth and importance of the health insurance sector, the CMA will have to play a greater role in the supervision and control by ensuring the good conduct of the insurance market players, and by closely monitoring the financial capabilities of insurers, to ensure that insured persons are provided with adequate protection. With the UHIP and the Rules in place, CMA has efficiently undertaken this role, and with SD No. 44 now in effect, this role will be strengthened. The key tools of supervision and control of the CMA are mainly reflected in the following:
As mentioned earlier, one of the obligations of insurers as set out in the Rules is to contract with a third-party administrator for health insurance claims (unless the insurer has a separate system to manage such claims). Health insurance claims require special diligence and care due to their frequency and sensitivity. By requiring the insurers to delegate the claims management mission to an expert party (the third-party administrator whose sole purpose must be the activity of a third party administrating as per Article 6 of Decision No. 34/2020), the CMA is ensuring a proper, efficient and professional handling and management of the health insurance claims.
As mentioned above, in order to avoid conflicts of interest and to combat any fraudulent acts against the insured, the CMA has prohibited any relationship between the main parties of the insurance operation, being the insurer, the healthcare provider, the third-party administrator, and insurance brokers and agents, unless in accordance with conditions and standards set out by the CMA. With this spirit and aim, Article 6 of the Rules and Article 22 of Decision No. 34/2020 (stated above) came to confirm this position by prohibiting the parties to own, operate or manage each other.
The CMA is tasked with safeguarding the parties’ rights and interests to ensure a proper conduct by all parties and smooth execution of activities in the insurance market. Both UHIP and the Rules have set out various obligations on the relevant parties.
On the UHIP level, the preamble of Chapter 2 (general conditions and provisions) requires the insurer to show the policy to the insured to make sure that the latter is receiving the required insurance coverage. Paragraph 1 of same Chapter requires the insured to provide correct information to the insurer. Paragraph 7 of same Chapter requires the insured to settle the insurance premium on the dates agreed on with the insurer. Paragraph 4 of Chapter 3 requires the insurer to settle the replaceable costs of the insured within a period not exceeding 15 days from the submission of all the required supporting documents. Paragraph 5 of same Chapter requires the insurer to inform the insured of its rejection of the claim within ten days of submission of the claim, with the reasons for such rejection.
Article 19 of the Rules sets out the obligations of the insurer, which include:
Article 21 of the Rules states that the beneficiary must refrain from doing any act to unlawfully acquire any medical benefits or financial profits.
The health insurance industry requires a constant evolution, mainly with the global emergence of pandemics and diseases and more sophisticated forms of treatment. COVID-19 has demonstrated the importance of health insurance and the need for a strong health infrastructure. Health insurance will always remain a strategic priority in Oman in view of its impact on the State, the economy, and society, thus requiring a growing role of the CMA at the level of the supervision and control and in introducing constant reforms to the insurance industry in general and in particular to the health insurance sector. Such role could be reflected in the following areas.
One of the areas to be given special attention is to broaden and strengthen the control not only over insurers, but also over healthcare providers and third-party administrators. In fact, fixing a reasonable price for insurance premiums (through a unified health insurance policy) will not ensure achieving the goal of successfully regulating the health insurance market unless healthcare providers provide valuable services to insured persons, and third-party administrators properly perform the vital role which they are delegated. This will improve health services standards in general, which could be only beneficial to the economy and the insured persons.
As mentioned above, both the Rules and Decision No. 34/2020 set out provisions aimed at regulating the relationship among the various stakeholders of the health insurance market. In pursuit of this goal, the CMA has prepared a draft “Unified Agreement” between insurance companies, healthcare providers and third-party administrators. The purpose of this agreement is to ensure seamless operations and to regulate the relationship between these stakeholders. The draft agreement sets out the rights and obligations of each party with the aim of ensuring that the rights and interests of each stakeholder are fairly protected. The CMA published in February 2021 the draft Unified Agreement and invited the concerned stakeholders to provide their input and feedback. We believe that such agreement when officially adopted will organise further the legal and technical relationship of the concerned stakeholders, which will only be beneficial to the insured and will ensure a well-controlled and balanced health insurance market.
In addition to healthcare providers, attention should be given to insurance distributors. Distribution of health insurance products could be done either directly by the insurer or indirectly through intermediaries (agents and brokers). Such intermediaries have a major role at many levels, mainly in increasing awareness on the part of the insured, which will lead to a better understanding and management of risk, and consequently, a healthier relationship between the parties. Insurance intermediaries should therefore keep the same distance with the insurer and the insured and refrain from sabotaging their interests for the sake of theirs. The CMA has a role to play in ensuring the proper conduct of business by insurance intermediaries.
Insurers have a crucial and strategic role of continuing supporting the Omani society and the economy to face the current challenges, particularly COVID-19. Additionally, we believe that both the insured and the insurer should share the responsibility of controlling insurance risk, because a well-managed risk is beneficial for both. In fact, a solid health insurance system provides the insured and the insurer with various securities as follows:
Therefore, the CMA must continue to closely supervise and control such relationship by fairly safeguarding the rights and interests of both parties.
The current overall limit under the UHIP is OMR 4,500, which is much lower than other GCC countries, namely the UAE and Saudi Arabia. We note in this respect that as per CMA Decision No. 98/2019 (which has extended the scope of covered persons to include household workers), the limit of coverage for the household workers is set at OMR 4,000, while that of the employee and his or her dependents is set at OMR 3,000. We therefore believe that the latter coverage could be, at least, increased to OMR 4,000 (to become equal to the coverage limit of the household workers).
However, such increase in the levels of insurance coverage does not only depend on the CMA but is rather intrinsically related to the overall economy growth in Oman.
Originally published in the MENA Business Law Review, Issue 03/2021
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