Insurance companies in the UAE are seeing a surge in claims due to the heaviest rainfall in 75 years. Some insurers report jumps as high as 400%, mainly for damages to cars. Similarly, businesses like restaurants and shops are also filing claims worth hundreds of thousands of dirhams due to rain-related damage. The UAE experienced its heaviest rainfall in 75 years from late Monday to Tuesday night, with recorded precipitation surpassing any data collected since 1949. The Khatm Al Shakla area in Al Ain received the highest rainfall, reaching 254 mm in less than 24 hours.
Highest claims
Avinash Babur, CEO of Insurancemarket.ae, mentioned that they have received four times more claims compared to previous rainy periods. He anticipates this to be an unprecedented time for the insurance industry, with the highest number of claims ever expected. Babur urged policyholders to be patient as they work to serve them during this critical time. Additionally, claims related to water damage and electrical issues at homes, retail outlets, F&B, and offices are also significantly high.
Anas Mistareehi, CEO of eSanad, echoed similar sentiments, expecting claims to reach unprecedented levels due to the severity of the rains. He estimated at least a 50% surge in claims compared to the last event.
Surge across all categories
Mistareehi emphasized the importance of promptly reporting damages or losses to insurance providers but clarified that reporting a claim does not automatically guarantee coverage or compensation. He noted a surge in claim submissions across various categories, including motor, property, projects, and construction. While motor claims are predominant due to the high number of vehicles on the roads during heavy rainfall, Mistareehi highlighted that property and construction claims are expected to be more severe in terms of impact. Rehman echoed similar sentiments, stating that the UAE witnessed its highest rainfall in 75 years, resulting in a surge in insurance claims that surpasses previous instances. He mentioned a significant increase in motor insurance claims, with some reaching up to 70%. Rehman also highlighted the challenges faced by shops and restaurants, with claims totaling approximately Dh2 million to Dh3 million within a day. The majority of these claims are related to motor vehicles stuck on flooded roads, while there is also a notable increase in property-related claims, particularly concerning water leakage issues in homes.
Pressure on insurers
Mohammed Ali Londe, vice president and senior analyst at Moody’s Ratings, highlighted that the widespread flooding will result in significant insurance claims across property, motor, and business interruption policies. He noted that local insurers often heavily rely on reinsurance, which will help mitigate their losses in this situation but may lead to increased pressure for higher reinsurance prices during upcoming renewals. Londe also mentioned that intense competition in the market and soft prices have previously impacted the profitability of UAE insurers. While profitability has gradually improved, he expects these floods to reintroduce challenges for earnings, particularly for small and medium-sized insurers that have struggled to generate underwriting profits.
News Source: Khaleej Times
