Gallagher Re surveys the impact of the Arabian Gulf floods
Gallagher Re surveys the impact of the Arabian Gulf floods | Insurance Business Asia
Reinsurance
Gallagher Re surveys the impact of the Arabian Gulf floods
Heaviest rainfalls in the UAE in 75 years expected to hit reinsurance programs
Reinsurance
By
Kenneth Araullo
The Gallagher Re cat analytics team reported on the severe flooding and torrential rains that impacted many Arabian Gulf countries in April, causing widespread inundation and significant losses across the southeastern Arabian Peninsula and surrounding regions.
According to the reinsurance broker, the events led to an anticipated influx of motor, commercial, and business interruption claims.
The flooding and flash flooding had notable effects on transportation, inundating homes and businesses. Rescues were frequent as motorists became stranded in rising waters. In several instances, vehicles were washed away and roads collapsed.
In Oman, at least 19 fatalities were confirmed in North Al Shaqiyah and the Wilayat of Adam. More than 1,400 people were sheltered in relief centers, and there were reports of individuals stranded. Overall, over 1,000 people were rescued.
Several dams reached full capacity and overflowed or were at risk of overflowing, including those located in north and south Sharqiyah, Muscat, Dhahirah, and Dakhliyah.
In the UAE, heavy rains brought transport services to a standstill, particularly in Dubai. Dubai International Airport suspended operations and diverted nearly 50 flights, with hundreds more canceled or delayed. Metro lines in the city were halted, stranding passengers. Ankle-deep water was observed at the Onpassive metro station.
Commercial shopping malls, including the Dubai Mall and the Mall of the Emirates, were inundated. Schools across the country were closed for at least two days. Reports indicated five people were killed, including three overseas workers.
Arabian Gulf floods – what are the market losses?
Using Gallagher Re’s proprietary flood model for the MENA region, along with the post-event footprint provided by JBA, Gallagher Re estimates the market loss for UAE property to be between $1.8 billion and $2.3 billion. This figure includes facultative risks and is subject to change given the uncertainties surrounding the estimate.
Similarly, Gallagher Re estimates the market loss for UAE motor to be between $350 million and $650 million. This includes comprehensive policies only, as third-party liability motor policies would not be covered. Due to the mobile nature of vehicles, there are additional uncertainties associated with this figure.
Gallagher Re noted that the UAE experienced its highest rainfall in 75 years. The rapid urbanization in major cities over recent years has led to increased rainfall runoff, exacerbating flooding. These losses equate to an industry loss return period of at least 100 years.
The UAE was the hardest-hit country in the region and is expected to account for the majority of the total loss. Oman also experienced significant impacts; however, in terms of insured losses, these are expected to be minimal compared to the UAE. Qatar, Bahrain, and Saudi Arabia also reported minimal losses.
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