A recent spate of fires in high-rise apartment blocks in Sharjah has left hundreds of residents homeless. But as well as the destruction such a catastrophe can cause, almost none of the tenants had taken out a home contents insurance policy.
This meant that as well as having no alternative accommodation to go to, they also had to fund the refurnishing of a new home.
In the most recent incident, in Al Tayer Tower in April, believed to have been caused by a discarded cigarette, hundreds of families from the block's 408 apartments were made homeless.
Sadly, because the residents relied on the building's insurance policy - which covers repairs to the building itself and not the tenants' personal belongings - they have virtually no hope of compensation.
For Hassan Emm, who lived in one of the gutted flats, the reality of losing everything is compounded by mounting hotel bills he can ill afford while he tries to find new accommodation.
"I lost everything and still find trouble coping with the situation, to find a new flat and start furnishing it," Mr Emm says.
Sadly, his story is a tragic reflection of the nation's low penetration rate for home contents insurance. Experts estimate only 5 per cent to 10 per cent of residents take out a policy - compared with 40 per cent or more in parts of Europe - meaning the majority are putting their personal belongings at risk.
"Ninety per cent of the UAE population is not insured and while the need to make a claim for your home is less likely than for your car, the claims are very high and it could have a very strong impact on the financial health of the family and your savings," says Alexis de Beauregard, the chief officer of marketing and retail product offering for AXA Insurance in the Arabian Gulf region.
What surprises Mr de Beauregard is that residents such as those living in Al Tayer Tower, who pay about Dh38,000 annually in rent, can cover their possessions for as little as Dh250 a year.
"When you think about it, it's ridiculous not to get insurance because cover for our products starts at less than Dh1 a day - that's one less coffee a month to pay your insurance premium."
That amount will cover all the standard problems, such as fire, theft, storms, water leaks and flooding, as well as alternative accommodation in the event of a claim, and worldwide protection for your personal belongings for up to 60 consecutive days when you are away on holiday.
Mr Beauregard believes uptake is low because home insurance is not mandatory in the UAE. People are unaware of the benefits of having a policy and many are risk-averse, believing they don't actually need one, he says.
But despite low crime rates and a low risk of natural disasters, such as earthquakes, residents need to be on their guard.
Jeremy Baggott, the head of private clients at the international insurance firm Zurich, which caters to higher-end clients as opposed to the standard market, says the biggest problem is people thinking they are safe.
"There's a misconception here that the main threat to your contents is fire, but in our experience theft does happen," he says. "The one thing that happens all the time is accidental damage - whether it's water leaking from the air conditioner or water damage from burst pipes while you're away in the summer.
"And don't forget about flooding. We may live in the desert, but when it rains, the properties aren't designed for it so we see instances of water leaking through the roof or coming under the doors."
Another big cause of claims is residents being robbed of their personal possessions while overseas. Mr Baggott also warns of the risk of shipping your valuables, quoting an American study that revealed 48 per cent of all art losses occur in transit.
"We've got clients with properties all around the world, shipping contents like fine art from a base in the UK to a base in Dubai and if it gets damaged and the client doesn't have insurance, then they are suffering a large loss."
Zurich, which charges Dh17,500 for contents worth Dh5 million, takes a bespoke approach to claims. While standard insurers ask clients to value their contents in slabs such as up to Dh75,000 or between Dh75,000 to Dh150,000, listing any items valued over a certain amount separately, Zurich's cover is broader and offers customers an all-risk cover. Policies come with worldwide cover for all contents and lost items are replaced with new.
Mr Baggott recalls a claim for a US$20,000 (Dh73,462) photographic print that was damaged after a Swiss gallery shipped it to a client in Dubai.
"The frame's glass broke and damaged the print. The client wanted a reprint so we contacted the artist who agreed to do another print subject to us sending the original back. We framed the new image over here so that this incident didn't happen again and the client was over the moon."
But it's not only damage to your precious items you need to be wary of. By not having adequate cover in place, you risk paying out huge sums if you accidentally damage another person's property or even injure someone.
"If you damage your flat and the landlord wants you to pay him back because you are fully responsible under the contract, that's where tenant liability can be made available," says Mr de Beauregard.
"You've also got third-party liability. If, for example, something on your balcony falls onto a high-value car below - then who pays for the car that is damaged? You will be liable for the damage or any medical expenses if you injure someone. "
Cases where no insurance is in place can see residents taken to court with the possibility of big payouts for repair costs and legal expenses, or even a jail sentence if the situation cannot be resolved.
But Mr de Beauregard says making contents insurance compulsory in the UAE, as it is in other nations around the world such as France, would not solve the issue because mandatory products would not suit everyone's needs.
Instead, the sentiment among insurance experts is that it's up to the industry itself to spread the message and make residents aware of how vital contents insurance actually is.
"People see it as hard work because insurers ask them to list items at relatively low values so insurers need to make it as easy as possible," says Mr Baggott, who adds that Zurich is working hard to spread the word to art collectors in the region about the importance of insuring their valuables through its new three-year sponsorship of Christie's biannual auctions in Dubai.
While Zurich offers an appraisal service, which assesses the value of a client's contents to save time, the standard market expects residents to make their own assessments. But with the process usually taking place online at a relatively low cost, it's only those without a policy in place who suffer in the event of a claim. That's something that Mr Emm, the Sharjah fire victim, is very aware of.
arayer@thenational.ae
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
Specs
Engine: 51.5kW electric motor
Range: 400km
Power: 134bhp
Torque: 175Nm
Price: From Dh98,800
Available: Now
THE SPECS
Engine: 6.75-litre twin-turbocharged V12 petrol engine
Power: 420kW
Torque: 780Nm
Transmission: 8-speed automatic
Price: From Dh1,350,000
On sale: Available for preorder now
The specs: 2019 Mercedes-Benz GLE
Price, base / as tested Dh274,000 (estimate)
Engine 3.0-litre inline six-cylinder
Gearbox Nine-speed automatic
Power 245hp @ 4,200rpm
Torque 500Nm @ 1,600rpm
Fuel economy, combined 6.4L / 100km
AL%20BOOM
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A MINECRAFT MOVIE
Director: Jared Hess
Starring: Jack Black, Jennifer Coolidge, Jason Momoa
Rating: 3/5
Results
5pm: Al Maha Stables – Maiden (PA) Dh80,000 (Turf) 1,600m; Winner: Reem Baynounah, Fernando Jara (jockey), Mohamed Daggash (trainer)
5.30pm: Wathba Stallions Cup – Maiden (PA) Dh70,000 (T) 1,600m; Winner: AF Afham, Tadhg O’Shea, Ernst Oertel
6pm: Emirates Fillies Classic – Prestige (PA) Dh100,000 (T) 1,600m; Winner: Ghallieah, Sebastien Martino, Jean-Claude Pecout
6.30pm: Emirates Colts Classic – Prestige (PA) Dh100,000 (T) 1,600m; Winner: Yas Xmnsor, Saif Al Balushi, Khalifa Al Neyadi
7pm: The President’s Cup – Group 1 (PA) Dh2,500,000 (T) 2,200m; Winner: Somoud, Adrie de Vries, Jean de Roualle
7.30pm: The President’s Cup – Listed (TB) Dh380,000 (T) 1,400m; Winner: Haqeeqy, Dane O’Neill, John Hyde.
The specs
AT4 Ultimate, as tested
Engine: 6.2-litre V8
Power: 420hp
Torque: 623Nm
Transmission: 10-speed automatic
Price: From Dh330,800 (Elevation: Dh236,400; AT4: Dh286,800; Denali: Dh345,800)
On sale: Now
WRESTLING HIGHLIGHTS
'Nope'
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LIVING IN...
This article is part of a guide on where to live in the UAE. Our reporters will profile some of the country’s most desirable districts, provide an estimate of rental prices and introduce you to some of the residents who call each area home.
THE BIO
Age: 33
Favourite quote: “If you’re going through hell, keep going” Winston Churchill
Favourite breed of dog: All of them. I can’t possibly pick a favourite.
Favourite place in the UAE: The Stray Dogs Centre in Umm Al Quwain. It sounds predictable, but it honestly is my favourite place to spend time. Surrounded by hundreds of dogs that love you - what could possibly be better than that?
Favourite colour: All the colours that dogs come in
New Zealand 57-0 South Africa
Tries: Rieko Ioane, Nehe Milner-Skudder (2), Scott Barrett, Brodie Retallick, Ofa Tu'ungfasi, Lima Sopoaga, Codie Taylor. Conversions: Beauden Barrett (7). Penalty: Beauden Barrett
Specs
Engine: Dual-motor all-wheel-drive electric
Range: Up to 610km
Power: 905hp
Torque: 985Nm
Price: From Dh439,000
Available: Now
NO OTHER LAND
Director: Basel Adra, Yuval Abraham, Rachel Szor, Hamdan Ballal
Stars: Basel Adra, Yuval Abraham
Rating: 3.5/5
The specs
Engine: Four electric motors, one at each wheel
Power: 579hp
Torque: 859Nm
Transmission: Single-speed automatic
Price: From Dh825,900
On sale: Now
Test
Director: S Sashikanth
Cast: Nayanthara, Siddharth, Meera Jasmine, R Madhavan
Star rating: 2/5
The White Lotus: Season three
Creator: Mike White
Starring: Walton Goggins, Jason Isaacs, Natasha Rothwell
Rating: 4.5/5
if you go
The flights
Direct flights from the UAE to the Nepalese capital, Kathmandu, are available with Air Arabia, (www.airarabia.com) Fly Dubai (www.flydubai.com) or Etihad (www.etihad.com) from Dh1,200 return including taxes. The trek described here started from Jomson, but there are many other start and end point variations depending on how you tailor your trek. To get to Jomson from Kathmandu you must first fly to the lake-side resort town of Pokhara with either Buddha Air (www.buddhaair.com) or Yeti Airlines (www.yetiairlines.com). Both charge around US$240 (Dh880) return. From Pokhara there are early morning flights to Jomson with Yeti Airlines or Simrik Airlines (www.simrikairlines.com) for around US$220 (Dh800) return.
The trek
Restricted area permits (US$500 per person) are required for trekking in the Upper Mustang area. The challenging Meso Kanto pass between Tilcho Lake and Jomson should not be attempted by those without a lot of mountain experience and a good support team. An excellent trekking company with good knowledge of Upper Mustang, the Annaurpuna Circuit and Tilcho Lake area and who can help organise a version of the trek described here is the Nepal-UK run Snow Cat Travel (www.snowcattravel.com). Prices vary widely depending on accommodation types and the level of assistance required.
Skewed figures
In the village of Mevagissey in southwest England the housing stock has doubled in the last century while the number of residents is half the historic high. The village's Neighbourhood Development Plan states that 26% of homes are holiday retreats. Prices are high, averaging around £300,000, £50,000 more than the Cornish average of £250,000. The local average wage is £15,458.
