One year ago, the UAE experienced an extraordinary weather phenomenon, with unprecedented rainfall leading to extensive flooding, which disrupted transportation and left many residents seeking assistance. However, the nation quickly returned to normalcy, primarily due to the swift actions taken by both authorities and the community.
Although the severe flooding posed significant challenges, it also catalyzed advancements within the insurance sector.
Over 100,000 vehicle claims in a matter of days
“The floods in April marked an unpredictable and unparalleled climate event in the UAE’s recent history,” stated Anas Mistareehi, CEO of eSanad. “We anticipate that over 100,000 claims were lodged across various lines of business, including motor, property, and commercial.”
Insurers reported that the total insured losses from this incident exceeded Dh4 billion, with a considerable portion attributed to vehicles that were submerged, immobilized, or extensively damaged by floodwaters.
Toshita Chauhan, the head of motor insurance at Policybazaar.ae, noted that the flooding had a significant impact on vehicles, particularly in Dubai, Sharjah, and Ajman. “Common reported issues included failures in engines, electrical systems, and brakes,” Chauhan added.
In spite of the overwhelming volume of claims—equivalent to what would normally be submitted over six to nine months—insurance companies rose to the occasion, effectively managing the surge in requests.
“Numerous firms swiftly created specialized teams to address the sudden influx,” Chauhan remarked. “The majority of claims were assessed and resolved within three months, demonstrating the industry’s efficient response.”
The industry adapts
The floods prompted a significant turning point in the insurance sector, highlighting the need for policies to adapt to the reality of climate-related events.
<p“Many insurers have modified their policies to encompass climate hazards as part of their standard or optional coverage,” Mistareehi shared. “This includes add-ons for weather-related damages, improved motor policy benefits, and business interruption insurance for commercial accounts.”
Chauhan noted a rising demand for comprehensive insurance that specifically includes natural disaster protection and roadside aid. “Consumers are now more educated and seek coverage that goes beyond basic policies, wanting protection against situations like flooding,” she explained.
“Currently, many insurance plans offer options to cover climate-linked damages,” said Mistareehi, pointing to flood protection, weather damage add-ons, and business interruption insurance as examples.
Increase in premium rates
Following the flood event, auto insurance premiums saw a marked increase, with rates for high-risk vehicles nearly doubling. “Insurers reassessed premium frameworks after the floods. On average, rates for motor insurance increased by 25 to 30 percent, while high-risk categories, like electric vehicles, experienced hikes of up to 100 percent,” reported Chauhan.
However, insurers believe that premiums have since stabilized. “Adjustments were necessary to maintain market sustainability. Barring another significant event, we anticipate gradual pricing modifications moving forward,” Mistareehi elaborated.
Insurance providers stated that current pricing now accurately reflects the true level of risk. “We do not foresee further dramatic increases. Pricing is more aligned with the actual risk landscape, with products becoming increasingly personalized and data-driven,” Chauhan indicated.
Attention to electric vehicles
As the trend of transitioning to electric vehicles (EVs) gains momentum, insurers are also customizing policies for this market segment. “Insurance for EVs tends to be more costly due to battery expenses and the need for specialized repairs,” Chauhan mentioned. “However, tailored coverage options are emerging to ensure proper protection for these vehicles.”
She recommended that EV owners ensure their insurance includes coverage for battery replacement and related components.
The importance of comprehensive coverage
While the UAE government is investing in drainage systems to mitigate future flooding risks, the necessity of full insurance coverage remains a pertinent topic. Experts advise that comprehensive insurance is still a wise investment.
<p“Floods represent just one risk. Comprehensive coverage protects against a broad array of unforeseen incidents including accidents, theft, fire, and more. It's an essential safeguard in today’s climate,” Chauhan noted.
Tips for reducing premium costs
Experts recommend strategies for drivers to keep insurance costs manageable and provide practical tips for navigating higher premiums.
- Maintain a clean driving record
- Consider raising deductibles (if financially viable)
- Bundle insurance policies
- Compare quotes from various insurers
- Purchase insurance exclusively from licensed and regulated providers
“The key is staying informed and proactive,” stated Chauhan. “When consumers are well-versed in their coverage, they are more equipped to handle the evolving insurance landscape,” she concluded.
SM Ayaz Zakir
SM Ayaz Zakir is a Senior Correspondent known for his compelling storytelling. His focus? The ever-evolving landscape of news.