Wednesday’s fire in the Naif Market, Dubai, which gutted more than 180 shops, demands an urgent review of the importance of insurance for businesses, according to the region’s largest retail insurance broker.
The incidents follows the massive fire in the Al Quoz industrial area last week, which destroyed dozens of warehouses, as well as a series of smaller industrial and commercial fires in February and March. A third warehouse fire, also in the Al Quoz industrial park, was extinguished on Thursday this week.
In total, the UAE saw around 14,000 fire accidents from 2002 to 2007, according to figures from the Emirates Insurance Association (EIA).
One of the major challenges for businesses-owners looking to rebuild is that without insurance the costs of keeping the company running whilst moving to new premises can be difficult to meet. Many businesses in the GCC do not have sufficient insurance and overall penetration rates are markedly lower than many Western economies.
“Events like the recent fires in Dubai should act as a sharp reminder for business owners of the importance of insurance, which provides people with the right resources to ensure business continuity. As well as the costs of rebuilding, businesses are often faced with an urgent need to replace business licenses, lost stock and machinery, plus documents lost in the fire,” said Michael Walton, Director, General Insurance at Nexus.
For the insurance industry, these events reinforce the need for a full risk assessment of a company’s insurance exposures, as well as rapid response to claims settlements. They also underline the need for risk avoidance and prevention measures to be a core part of the insurance process.
“If we can encourage a wider discussion around insurance, this could help to inculcate a stronger business culture of risk management. Companies need to fully assess the extent of the risks to their businesses, reduce these where possible, and ensure that they have sufficient insurance to cover the costs of restoration,” said Walton. “Under-insurance is as much an issue as no insurance – companies need to fully evaluate the business assets that need insuring.”
As well as physical assets, businesses should consider the importance of safeguarding their employees in the event of accident and fire. Workers Compensation insurance is mandatory in the UAE, although not all companies purchase it.