In the aftermath of recent natural disasters in the United Arab Emirates (UAE), insurance companies are recalibrating their premiums to reflect heightened risks.
Insurance Premium Adjustments in Response to Natural Calamities
In the United Arab Emirates, recent natural calamities have prompted shifts in insurance premiums, with some providers already implementing adjustments and others contemplating similar actions. Following a deluge on April 16th, insurers have observed a surge in claims, predominantly stemming from vehicular damages, property losses, and business interruptions. This inundation of claims has led to prolonged processing times and strained resources within the insurance industry.
In response to the heightened risk posed by natural disasters, many insurers have opted to revise their premiums, particularly for coverage related to such events. Reports indicate that premiums for policies encompassing natural catastrophe protection have surged by as much as 50 percent in the wake of the record-setting rains. However, it's noteworthy that not all insurance companies have uniformly adjusted their rates; some have increased premiums, while others are deliberating potential revisions.
Moin ur Rehman, an executive director at Unitrust Insurance Broker, underlined the variability in premium adjustments across the industry. While most car insurance policies in the UAE incorporate coverage for natural perils like floods and earthquakes, exceptions exist, and policyholders are advised to consult their insurers for precise information regarding any rate alterations.
Collaborative Efforts to Expedite Claims Processing
The aftermath of the unprecedented rains has catalyzed a flurry of claims, with automobiles bearing the brunt of the damage. Avinash Babur, the founder and CEO of Insurancemarket.ae, noted that several insurers have reevaluated their risk models in response to the recent calamities, resulting in adjustments to premiums. This realignment has translated into premium hikes averaging between 10 and 20 percent for policies inclusive of natural disaster coverage, with further increases anticipated.
Neeraj Gupta, CEO of Policybazaar.ae, echoed the sentiment, indicating that premiums for natural catastrophe coverage within car insurance policies have surged by 20 to 50 percent post-April deluge. Gupta also highlighted the dynamic nature of premium adjustments, with rates fluctuating frequently, particularly in the realm of comprehensive coverage.
Despite the surge in claims, insurers are grappling with prolonged processing times due to capacity constraints at repair workshops and the sheer volume of claims. Assessing flood damage repairs and approving claims have been notably protracted, with the backlog further exacerbated by the limited capacity of repair facilities. Consequently, the settlement period for claims has elongated to 21–25 days, with delays expected to persist in the short term.
Moreover, the surge in claims has prompted insurers and repair workshops to contend with capacity constraints, necessitating collaboration to expedite the claims process. However, Moin ur Rehman cautioned that delays may persist as insurers navigate multi-vehicle incidents and contend with capacity limitations within repair facilities.
The recent natural calamities in the UAE have precipitated adjustments in insurance premiums, particularly for coverage related to such events. While insurers are grappling with an influx of claims and prolonged processing times, efforts are underway to streamline the claims process and mitigate delays.
