QLM Life & Medical Insurance Company (QLMI) is “best positioned” from the implementation of mandatory health insurance in Qatar, Arqaam Capital has said in a report.
“The Qatari Cabinet has approved a draft law on healthcare services that mandates all residents and visitors to be covered under a health insurance policy, much faster than we had expected,” Arqaam Capital noted.
The draft law has been referred to the Shura Council for its review. The draft law calls for establishing necessary policies, plans, procedures, systems, and standards to provide healthcare services in governmental and private health facilities.
“However, the draft law also stipulates that Qatari nationals will be provided healthcare services in government health facilities for free, limiting the scope of the role for private insurance companies to expats and visitors only,” Arqaam Capital said.
Arqaam Capital said it expects the medical segment to more than double if National Insurance Scheme is rolled out and implemented in full by the private sector.
“We expect the number of active policies to increase to nearly 2.5mn from expats in the private sector (vs 500,000 currently) and to nearly 7.1mn with FIFA 22 WC visitors.
“We now model for a GWP CAGR of 24.1% (vs 3.5% previously) and increase overall GWP growth by +205%. The introduction of mandatory healthcare insurance would also enhance actuarial data points and better diversify risk against a larger pool of the insured.
“As such, we expect the claim ratio in medical to further improve (-2.1ppts) to 88.2%, though the expense ratio should increase to 3.5% (vs 1.3% in FY 20A), due to higher policy acquisition costs, as the distribution transitions to a higher share of agents and brokers, even though QLMI's in-house distribution network could keep the insurer's expense ratio lower than we currently estimate.”
According to Arqaam Capital, all focus is now on implementation, as the current draft law calls for “establishing necessary policies, plans, procedures, etc.”, while the government had already begun two tenders in December: one for system development, and another for consultation.
“We expect QLMI to be an inherent winner, given its commanding market share of 50%, and superior customer service experience, while the company is expected to roll out a new medical product for expats in H1, 2021e (ahead of the competition).
“We assume a market share of 50% in medical insurance and 25% share for inward travel insurance.”
