The Cost of Motor Insurance Expected to Surge in the UAE After Heavy Rains

Last updated on : 10 Jun 2024
3 min read

The aftermath of the unprecedented heavy rains that hit the UAE in mid-April has sent ripples through the insurance industry, particularly impacting motor insurance premiums. As insurers grapple with a surge in claims for damages incurred during the deluge, motorists in the UAE brace themselves for an imminent increase in the cost of insurance coverage.

According to industry insiders, insurance firms have reacted to the spike in claims by raising premiums by up to 30 per cent. This surge in premiums comes on the heels of the heaviest rainfall the UAE has experienced in 75 years, resulting in widespread flooding across several emirates, including Dubai, Sharjah, and Ajman.

One notable consequence of this uptick in premiums is the increased demand for comprehensive insurance packages. Unlike third-party liability (TPL) plans, comprehensive coverage extends protection against damages resulting from natural disasters. Consequently, many vehicles and homeowners are opting for these costlier packages, driving up demand by as much as 100 per cent in the aftermath of the rains.

The automotive sector, in particular, is set to bear the brunt of these premium hikes, with saloons and sports/coupe cars facing the most significant impact. Reports suggest that these vehicle categories were among the worst affected during the recent rains, prompting insurers to adjust their rates accordingly.

While the extent of these rate increases varies among insurers, there is a noticeable trend across the industry. Premiums for both motor and property segments have seen marked hikes, with reports indicating increases ranging from 10 to 30 per cent. This surge in premiums reflects the industry's efforts to mitigate the financial strain caused by the surge in claims post-rainfall.

Despite the immediate need to address the influx of claims, insurers are also looking ahead to the broader implications of the recent weather events. The focus is currently on evaluating the full impact of the torrential rains and ensuring prompt support for affected policyholders. While insurers have thus far maintained their premium rates post-rainfall, the industry anticipates potential adjustments in the future.

Future considerations for premium adjustments will be carefully evaluated to uphold principles of fairness and affordability. Insurers understand the importance of striking a balance between covering the increased risk posed by natural disasters and ensuring that insurance remains accessible to all motorists and homeowners.

In conclusion, the aftermath of the heavy rains in the UAE has prompted a significant shift in the insurance landscape, particularly regarding motor insurance premiums. As insurers respond to the surge in claims and heightened risk of natural disasters, motorists can expect a rise in the cost of insurance coverage. However, efforts to maintain fairness and affordability remain at the forefront of industry considerations as insurers navigate the evolving challenges posed by extreme weather events.

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