AM Best: Emirati insurers facing flooding in Dubai

According to a study by AM Best, Emirati insurers are expected to receive a significant number of claims related to damage caused by the recent floods in Dubai.

However, the low insurance penetration in the country and the extesive reinsurance coverage should keep the costs borne by local insurers at a manageable level.

The motor industry would be the most affected sector due to the extreme consequences of the disaster: increase in the number of traffic accidents, flooded roads and car parks, etc.

In the UAE, comprehensive motor policies, which typically cover flooding, are rarely underwritten. The majority of policyholders opt for cheaper third-party liability policies.

In recent years, extreme weather around the world, particularly in the Gulf Cooperation Council (GCC) area, have already influenced the behaviour of insurance companies. Some companies have begun to take steps to reduce their exposure to catastrophe risk through loss mitigation tactics.