UAE Rains: Low Insurance Purchases Post-Floods
Insiders in the industry share that there is an increased need for warehouse insurance policies after rainy seasons as businesses seek to safeguard their products.
Despite the significant financial losses suffered by retailers during the unprecedented floods on April 16, UAE shop owners still have not increased their purchases of rain insurance coverage plans.
Nevertheless, there is an increased need for warehouse insurance policies after rain among industry experts as companies seek to safeguard their stored goods.
The heavy rainfall on April 16 caused significant disruptions to both small and large businesses, resulting in damage to properties and vehicles. The UAE experienced its most intense rainfall in 75 years.
Normally, it is anticipated that retailers will show an increased interest in getting insurance for their stores after such events. Nevertheless, shop owners did not experience this trend. It is worth noting that there has been a notable increase in business owners' interest in warehouse insurance, with inquiries rising by almost 20 per cent. Avinash Babur stated that there is an increasing recognition of the importance of safeguarding bigger storage facilities from comparable dangers.
After the heaviest rains, Anas Mistareehi, CEO of eSanad, noted a rise in inquiries and interest in property insurance coverage. He said the purchase rate stayed low because many individuals were not aware of the full extent of insurance coverage and the protection it provides.
Insurance companies in the UAE saw a significant rise in claims as a result of the unprecedented rainfall, particularly for vehicles affected during the incident. Certain parts of Dubai, Sharjah, and Ajman were still inundated for several days following the rainfall.
Retailers typically choose from a variety of insurance policies depending on their individual requirements. The basic coverage usually requires a separate policy for "Property All Risks". Many retailers opt for packaged policies that provide coverage for their property, public liability, and workmen's to ensure comprehensive protection.
A Property All Risks (PAR) insurance policy offers coverage for water and rain damage as well as protection from accidental damages like fire, theft, and other natural disasters. Having this extensive coverage is essential for retailers to manage risks and guarantee the long-term success of their businesses when unexpected situations arise.
Effects of rainfall in April
Mistareehi stated that the rains in April had a severe impact on numerous retailers. The majority of people were unfamiliar with the situation, causing them to be ill-equipped and experiencing substantial losses. Retailers need to see insurance as a crucial investment to safeguard against unforeseen and surprising losses. The CEO of eSanad stated that individuals who had insurance faced small interruptions and minimal losses, whereas those without insurance experienced substantial financial harm and were close to facing the collapse of their businesses.
Avinash Babur noted that retailers were significantly affected by the heavy rainfall on April 16. There was a notable increase in claims in our general insurance portfolio after the incident. From April onwards, there has been a 45 per cent rise in general insurance claims, mostly caused by flood-related incidents. Babur added that while some clients reported their claims after a slight delay, there was a noticeable rise in the number of claims, indicating the severity of the damage and financial impact on business owners.
He highly recommended that shop owners buy rain insurance policies to safeguard their assets (furniture, fixtures, and equipment) and protect their stock from water damage.
Furthermore, it also plays a role in ensuring business operations continue smoothly by compensating for lost income and rent, enabling the business to swiftly bounce back from any disruptions due to rain or flooding.
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