MEED: How has Saudi Arabia’s health insurance market changed since Bupa Arabia was established?

Tal Nazer: The real transformation was after the law was passed, making it mandatory to have health insurance for the expatriate population. This came into effect in July 2006. Before that, the market for health insurance was 1 million customers but, since the law was passed, it has increased sevenfold. We currently have about 20 per cent market share and according to Sama’s statistics, we increased our market share the most in 2008 [by 50 per cent].

What effect has the new insurance law had?

The market is more competitive since the insurance law came in. Before, the market was not regulated, so you really didn’t know who you were competing with.

There were probably 80-100 insurance companies but you didn’t know their history or background, and there was no protection for the customers. The insurance laws regulated the market and made the competition operate among stronger, more financially viable companies. Now there are 35 publicly listed, financially strong companies, which all want to grow and build market share, so competition has, in fact, become more intense.

How are you staying competitive?

From our perspective it is all about service, and this is how we differentiate our business. According to local law, all companies have the same products – this is mandated by the Council for Co-operative Health Insurance (CCHI). So there is no real product differentiation and the only way we can differentiate is through service. We divide this into two key categories. First, we invest heavily in technology, so we have mobile phone text messaging services, online services and fingerprint technology and we try and stay ahead of the game in that field. But we believe we must continue to invest in technology and continue being innovative. Secondly, we focus on customer service. We provide a lot of healthcare services. We have a medical helpline for customers to get medical information. We educate customers through seminars, as in our swine flu campaign.

How does your relationship with healthcare providers work?

It works extremely well. We deal with about 500 hospitals and clinics in Saudi Arabia. We have built strong relationships with them over the past 13 years. It is a matter of understanding the systems and processes and having strong service level agreements, so the relationship is quite strong. We are developing a paperless system – 90 per cent of pre-approvals are online.

Bupa Arabia’s profits fluctuate throughout the year, why is this?

The reason is that the health insurance business is by nature seasonal. We make our profits in the latter parts of the year, due to summer vacations. People generally don’t go to hospital during their summer vacations.

What is happening with profitability generally?

Profits are improving, due to increases in volume. We focus mainly on making profit through operations and have a conservative strategy. We see ourselves more as a health and care company rather than an investment company.

What is your growth strategy?

The market will continue to grow but not at the level it has enjoyed in the past few years. It potentially can add another 3 million customers in the next three years. The strategy is going to be about customer retention and building market share rather than organic growth with the market – unless the government passes a law requiring the Saudi population in general to have health insurance.

Discussions about this are ongoing. The market has seen the benefits of compulsory health insurance for expatriates. We can definitely see a reason for giving this option to the Saudi population. Our main aim is to continue to invest in our service levels and to stay ahead of the competition. We are moving to new headquarters in Jeddah and will hopefully achieve 1 million customers.