In the wake of recent extreme weather events, including unprecedented flooding, UAE insurers are gearing up for an influx of claims. The country experienced its heaviest rainfall in over 75 years, causing widespread disruption and damage.
A report by AM Best, a leading credit rating agency specializing in insurance, highlights the potential impact on insurers. While insurance penetration in the region remains low, robust reinsurance coverage is expected to help manage the financial burden on primary insurers.
Among the sectors most affected is motor insurance, with flooded roads and car parks leading to an increase in claims. Notably, standard motor policies in the UAE do not cover natural disasters, leaving insurers to decide whether to offer such coverage.
Despite the challenges, insurers are adapting to changing weather patterns. Events like hailstorms and heavy rainfalls have become more frequent, prompting insurers to implement proactive measures. These include issuing weather notifications to consumers and advocating for infrastructure improvements to mitigate losses.
As insurers navigate the evolving climate landscape, their ability to innovate and adapt will be crucial in ensuring the resilience of the insurance industry in the face of mounting climate-related risks.
photo source: Google
By: Montel Kamau
Serrari Financial Analyst
19th April, 2024
