On 16 April, Dubai was affected by sudden, heavy rains that caused significant damages. Elsewhere, in Al-Ain, just over sixty miles from Dubai, nearly three times the usual annual rainfall was experienced in a single day.
Elie Abi Rached, CEO of global operations, Chedid Re, spoke to GR at the Dubai World Insurance Congress 2024 (DWIC), about the market impact expected due to the incident.
“It was unprecedented,” said Abi Rached (pictured).
“It was one of those events that the United Arab Emirates had not experienced in seventy-five years. At the same time, the government reacted swiftly and proactively in containing the damage and getting back to business as usual. Just ten days later, we could barely notice anything out of place.”
Abi Rached said he expected damage to be largely limited to property, motor and engineering, although the claims bill will take time to materialise. He gave a broker’s perspective on how buying habits may change as a result of the incident.
“The volume will likely depend on the supply available in the (re)insurance market,” he said. “As an industry, we need to focus on enhancing our resilience to these vulnerabilities.”
“This event has heightened public awareness on the importance of comprehensive insurance coverage. Beyond the usual motor third-party liability insurance, the market can expect growing consumer demand for more extensive homeowners’ property policies.”
Smaller local insurers are likely to struggle most as a result of claims, rating agency reports have pointed out, which Abi Rached acknowledges.
“Each company, depending on its portfolio mix, will experience this impact differently,” he said.
“The cost of reinsurance will place more pressure on companies and have a knock-on effect on their profitability. We’re already seeing regulators stepping in to support the market and help build stronger insurance companies that are capable of weathering such shocks.”
One option, Abi Rached said, may be that of a mutual (re)insurance pool for catastrophe risk, such as have been created in other jurisdictions.
He said that he expected the market to be supportive of any move in this direction by the regulator.
He added: “Such initiatives are welcome, where regulators intervene to nudge the market in this direction, encouraging all market players to engage in industry-wide collaboration and growth.”
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