UAE flooding property insurance loss seen up to US $2.3bn by Gallagher Re
Demonstrating that large industry loss events from severe weather are possible in the Arabian Gulf region, reinsurance broker Gallagher Re has estimated that the property market insured loss from the recent flooding that affected the United Arab Emirates in April will be between US $1.8 billion and $2.3 billion.
That’s not the total insurance market loss either, as Gallagher Re also estimates that motor lines of insurance business in the affected area could see losses in the range from US $350 million to US $650 million.
Which would give a range for the total insurance market loss from the UAE Arabian Gulf flooding of between US $2.15 billion and $2.95 billion, by the brokers estimation.
Gallagher Re said that this was the heaviest rainfall event in the UAE in 75 years and that the losses will hit reinsurance towers.
Torrential rainfall drove the flooding that affected many Arabian Gulf countries between April 13th and 17th this year.
Numerous locations received more than a year’s worth of rainfall in just 24 hours, which drives home the exceptional nature of this weather disaster.
There were 33 fatalities reported from the flooding across four countries, with Oman suffering the highest number at 19, Gallagher Re explained.
Numerous homes and businesses were damaged by the rain and flood waters, which has driven the property insurance market loss, while on the motor side as roads were overwhelmed by the deluge the costs are set to be high as well.
“The flooding and flash flooding led to exceptional impacts on transportation and inundated many homes and businesses. Rescues were frequent as motorists became stranded in rising waters. In several instances, vehicles were washed away and roads collapsed. An influx of motor, commercial, and business interruption claims are anticipated,” Gallagher Re explained.
Dubai was brought to an almost standstill as transportation systems were affected badly, while the airport was flooded and resulted in suspended operations and diverted flights.
The reinsurance broker summarised, “Using Gallagher Re’s proprietary flood model for the MENA region, alongside the post-event footprint that JBA has provided, Gallagher Re estimates the market loss for UAE property to be in the range of USD1.8bn to USD2.3bn. 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 in the range of USD350mn to USD650mn. This includes comprehensive only, since third-party liability motor policies would not be covered. Due to the mobile nature of motors as well, there are additional uncertainties associated with this figure.”
The broker said that these losses “equate to an industry loss return period of at least 100 YRP.”
The majority of the insured losses are expected in the UAE, while Oman was badly affected insurance penetration there is lower.
