Property insurance premiums could rise in UAE after fire accidents - Gulf Business
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Property insurance premiums could rise in UAE after fire accidents

Property insurance premiums could rise in UAE after fire accidents

Dubai specifically has seen a spate of fire accidents in recent years

Property insurance premiums in the United Arab Emirates could increase to a “sustainable” level following the recent spate of fire accidents in the country, an expert has said.

Dubai specifically has seen a surge in fire incidents at tall buildings in recent years. Most recently, a blaze at the Address Hotel Downtown Dubai on December 31 gutted the entire building.

“Historically property insurance premium levels in the region have been significantly low and below sustainable levels,” said technical director at RSA insurance group AK Ravindran.

“Technicalities of insurance pricing is often compromised, as multiple players compete purely on price parity and not based on the risk or exposure parameters.

“The frequent fire incidents are eye openers for players and we expect an appropriate price correction that would help the portfolio become sustainable,” he explained.

However, the increase in the frequency of fire accidents is a matter of concern for the insurance and reinsurance providers operating in the region, Ravindran opined.

Such incidents impact the sustainability of their property insurance portfolios.

“What is important from an insurance provider’s perspective is to ascertain the primary reason behind such a trend. Only an in-depth segmentation study of the portfolio will reveal the characteristics of the risks that create such a trend in any region.

“Any responsible insurance provider should ideally engage in such an exercise relating to their portfolio to identify their exposure to such loss generating categories of risks and take appropriate remedial actions through risk management, pricing adequacy and refraining from high fire risk segments that are not appropriately protected.”

While the exact reason for the Address fire has not yet been confirmed, experts say building fires spread rapidly because of the use of non-fire resistant composite aluminum panels on the exteriors.

These cladding panels contain a mix of aluminum and polyurethane, which ignite when exposed to flames.

However authorities are taking measures to improve the fire safety standards in Dubai. Buildings in the emirate will be subject to stricter safety regulations, the Dubai Civil Defence authority announced earlier this week.

The authority said it will be carrying out a fire safety review of every building in the city. From March, developers will have to employ an outside consultant to oversee the building process from the first foundations until a year after a building’s completion, in line with a new national code.

Building owners will also be required to employ an external company to carry out maintenance work.


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