Rain insurance coverage plan purchases by UAE shop owners remain low despite the unprecedented April 16 floods causing massive financial losses to retailers.
However, industry insiders reveal a higher demand for warehouse insurance policies in the post-rain period as companies look to protect their goods stored in the warehouses.
Both small and large businesses were severely disrupted by the record rains on April 16, damaging properties and vehicles. It was the heaviest rain in the UAE in 75 years.
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“Typically, one would expect a surge in interest among retailers to insure their shops following such incidents. However, this trend was not observed among shop owners. Interestingly, we noted a significant uptick in interest in warehouse insurance among business owners, with inquiries increasing by nearly 20 per cent. This indicates a growing awareness of the need to protect larger storage facilities from similar risks,” said Avinash Babur, CEO of Insurancemarket.ae.
Anas Mistareehi, CEO of eSanad, said after the heaviest rains, there was a noticeable increase in inquiries and interest in property insurance coverage. “However, the actual purchase rate remained low because many people lacked awareness about the extent of insurance coverage and the protection it offers,” he said.
Insurers in the UAE reported a massive increase in claims due to the record rains, especially related to vehicles that were damaged in the event. Some areas in Dubai, Sharjah and Ajman remained flooded for quite a few days after the rains.
Retailers generally opt for a range of insurance covers based on their specific needs. The minimum coverage typically involves a stand-alone ‘Property All Risks’ policy. For comprehensive protection, many retailers choose packaged policies that include coverage for the property, public liability, and workmen’s compensation. These packages provide a holistic approach to risk management, ensuring that both the physical assets and legal liabilities are adequately covered.
A Property All Risks (PAR) policy not only covers damages caused by water and rain but also includes protection against accidental damages such as fire, theft, and other natural perils. This comprehensive coverage is crucial for retailers to mitigate risks and ensure the sustainability of their businesses in the face of unforeseen events.
Impact of April rains
Mistareehi added that the impact of the rains in April on many retailers was severe. “The situation was new for most, leaving many unprepared and resulting in significant losses. Retailers should view insurance as a vital investment to protect against unforeseen and unexpected losses. Those with insurance experienced minimal disruption and limited losses, while those without it suffered significant financial damage and nearly saw their businesses collapse,” said the CEO of eSanad.
Avinash Babur said the impact of the April 16 rains on retailers was quite severe. “Our general insurance portfolio saw a significant rise in claims following the incident. Since April, there has been a 45 per cent increase in general insurance claims, predominantly due to flood-related damages. Many clients reported their claims slightly later, but the overall trend shows a marked increase in the number of claims, highlighting the extent of the damage and financial loss suffered by business owners,” added Babur.
He strongly advised shop owners to purchase rain insurance policies to protect their assets (furniture, fixtures and equipment) and to protect the stock in trade against water damage.
In addition, it also helps maintain business continuity by covering loss of revenue and rent, ensuring that the business can recover quickly from any interruptions caused by rain or flooding.