Fewer Than 10% of Companies Provide Group Life Insurance or any Income Protection for Staff, but Frequently end up Paying Out of Pocket at Times of Crisis
Dubai, United Arab Emirates - The lack of any financial safety net can leave expat workers (especially those with families) at risk of financial disaster in the event of a serious injury or death, which could leave themselves or a bereaved partner facing the legal issues that surround un-payable debts. In many cases, company owners and sponsors are asked to spend their own money, to bail out distressed employees/or their families who have nowhere else to turn to.
That is the stark assessment from a leading UAE business insurance expert, Duncan Crerar, Director of Corporate Solutions at Nexus Insurance Brokers. He says compulsory health insurance has given many expats and employers a false sense of security that they are protected in the event of an emergency. In reality, health insurance doesn’t cover anything more than medical bills and he estimates that fewer than 10 per cent of Employers provide coverage for their employees in the event of death or disability.
“Beyond the requirement for health insurance, the only safety net is the UAE Labour Law,” Crerar says. “That requires employers to pay 24 months’ salary in the event of death or permanent disability caused by an occupational incident, but capped at 35,000 dirhams.”
However, he emphasises the limit is not 35,000 dirhams salary per month, but 35,000 dirhams as a maximum total payment and there is no coverage at all if the incident was not work related. It’s a requirement mainly aimed at protecting lower paid blue-collar workers, on wages of below AED 1,500 per month.
“If you’re earning 35,000 dirhams a month, the liability is one month’s salary, so you’ve basically got nothing,” he says. “What are you going to do with one month’s salary or, more importantly, what is your family going to do? Your spouse could be left struggling to pay off a credit card or other loans, just so that they can leave the country. Even that small amount itself is only payable if you have an accident at work, not if you fall sick, or have an accident in your own time.”
Although he advises expats to take out their own life and disability insurance privately, he says that Employers should be making proper provisions to protect their employees and their families, along with their own interests, through a group policy offered as an integral part of the salary/compensation package.
Crerar says group life insurance is available at minimal costs – very significantly less than health insurance – that protects employees, provides a benefit that is worth far more to the individual than it costs to the business, promotes goodwill and loyalty among staff, and can enhance the company’s reputation when recruiting.
It can also save employers money, particularly among small to medium sized enterprises, with company owners who are all too often called upon to pay emergency expenses.
“This is much more of a problem among SMEs than it is among large multi-national companies, but it’s not that they are deliberately avoiding the solution, it can often be a lack of awareness” says Crerar. “I’ve seen a number of company owners left with this moral dilemma and spending considerable sums to help staff/families in trouble, going far beyond what the law requires”.
Effectively, that’s self-insuring, but people aren’t doing this in the knowledge that they’re self-insuring, it’s just that every now and then when bad things happen, they feel obliged, and that they should help out and they should pay. That’s a ridiculous situation to put yourself in when you can transfer all aspects of this risk to an insurer. Then you don’t have people turning up at your door distraught, in trouble and needing air tickets home or debts paying off, because the financial aspects of such an emergency can all been taken care of.”
The Nexus Group, with its core operations of Nexus Insurance Brokers and Nexus Financial Services, is the largest financial advisor in the GCC region. It offers a range of insurance, savings and investment products to both corporate and individual clients, sourced from a range of international and domestic product providers.
Media contact
Mark Robinson, Wallis, +971 55 127 9764, nexus@wallis-mc.com
