The storms that rocked the UAE last week have left homeowners and motorists facing unexpected bills and clean-up costs, with insurance companies reporting a spike in the number of claims due to water damage.
According to Dubai Met office, Dubai received a record rainfall of 110 millimetres over a two-day period during the storms. Sharjah, Ajman and Abu Dhabi also saw heavy rain and some flooding.
The resulting damage to homes and properties – in addition to the high number of motor accidents and engine seizures caused by driving into deep water – have again highlighted the importance of adequate insurance cover.
Even though this was the second year in a row when rainstorms caused widespread difficulties, the penetration rate for home insurance and home contents insurance still stands at less than five percent in the UAE, meaning that many people are not protected against the costs of flooding.
“Situations like the January rainstorms highlight the necessity of adequate insurance and demonstrate the challenges posed by the high number of under-insured and uninsured properties in the UAE,” said Michael Walton, Director - General Insurance, Nexus Insurance Brokers.
“Given that experts believe that climate change will result in more extreme weather in the coming years, it is likely that the associated problems are likely to increase, unless more people insure their assets,” he added.
One benefit of home insurance is that issues surrounding liability – such as over whether the master developer or local authority is ultimately responsible for bearing the costs of storm-damage – are managed by the insurance company. Clean-up costs are also managed by the insurance company on behalf of policy-holder, who can get on with rebuilding and redecorating.
Lack of awareness around the accessibility of home and home contents insurance is seen as one of the reasons for the current shortfall in cover. With AED 100,000 worth of cover being available for premiums of around AED400 a year, it is not thought that cost is a major factor in people’s decision not to purchase insurance.
Vehicle owners could also benefit from better awareness of the cover provided by their motor insurance. Traffic chaos caused by the rains resulted in 1,307 vehicle accidents recorded in a single day during the storms. Water-damages sustained by parked and partially-submerged cars also added to costs for many motorists.
“It’s important for drivers to know that some insurance policies do provide coverage in the event of water damage to their vehicle, covered under the ‘Riot, strike, storm and flood’ clause,” said Angela Baldwin, Corporate Development Manager, Axa Insurance (Gulf).
“If this protection is in place, the convenient claims processes that companies like Axa Insurance have in place enable motorists to get their vehicle back on the road more quickly,” she added.
Partnering with international companies, Nexus offers a growing selection of home owners, home contents and motor insurance.
In 2007, insurance companies in the region saw a surge in claims in the aftermath of Cyclone Gonu. In Oman alone, total damage caused amounted to more than US$4billion.
About Nexus Group of Companies
Nexus is an exciting force in professional financial services. Our unique approach will help you and your family to accumulate and protect your wealth today and tomorrow.
At Nexus, our expertise and independence mean we are perfectly positioned to deliver the first-class service you deserve. As qualified professionals in wealth accumulation and protection, we are a company you can trust to understand your unique financial situation.
The Nexus Group of Companies consists of Nexus Insurance Brokers LLC (UAE) and Nexus Financial Advisors (Bahrain).
About AXA in the Gulf
AXA in the GCC, with a workforce of over 400 employees, 12 offices region-wide, a substantial customer base and a gross written premium of around US$300 million, is a major international insurer in the Middle East offering a wide range of insurance products and services for corporate and individual customers.
About AXA Group worldwide
AXA Group is a worldwide leader in Financial Protection. AXA's operations are diverse geographically, with major operations in Western Europe, North America and the Asia/Pacific area. AXA had Euro 1,315 billion in assets under management as of December 31, 2006. For full year 2006, IFRS revenues amounted to Euro 79 billion, IFRS underlying earnings amounted to Euro 4,010 million and IFRS adjusted earnings to Euro 5,140 million. The AXA ordinary share is listed and trades under the symbol AXA on the Paris Stock Exchange. The AXA American Depository Share is also listed on the NYSE under the ticker symbol AXA.
