UAE home insurance premiums rise while residents still struggle with flood repairs

Home insurance premiums have increased by 10 to 15 per cent after the flooding from record rainfall in the UAE last year, experts said, with homeowners still dealing with the aftermath.

The deluge, on April 16 last year, caused widespread damage and disruption to the UAE during the heaviest rain since records began in 1949. This prompted many insurers to reassess their risk models, especially for villas and low-lying residences.

“As a result, we’ve seen a more cautious approach to underwriting and some changes to premium structures and policy coverage. On average, home insurance premiums have increased by 10 to 15 per cent,” said Neeraj Gupta, chief executive of insurance comparison website Policybazaar.ae.

“The actual hike varies based on property location, structure type and claim history. Properties with prior claims or lacking proper drainage systems have seen even higher adjustments.”

More than one year after the floods, some homeowners are still struggling with insurance companies to pay out for necessary repairs to the damage that was caused. “There was an initial surge in claims, and to their credit, insurers responded swiftly by deploying rapid response teams,” Mr Gupta told The National.

“There have also been instances where policy coverage terms or exclusions created confusion, particularly around what constitutes flood damage. It’s evident that improving customer awareness and preparedness around home insurance policies will be crucial in minimising such friction going forward.”

Mr Gupta said the main damage was caused by water ingress, the term used when water from outside enters a property, which affected both the structure of homes and the contents inside.

“This included damage to walls, flooring and electrical systems, as well as personal belongings like furniture, appliances and electronics,” he added. In the aftermath of the rain that saw 254mm fall in a few hours, the UAE announced a Dh2 billion ($540 million) repair fund.

Premium levels on the rise

Anand Nair, senior vice president, head of personal lines, small and medium enterprises at insurers Adnic, told The National that they saw a moderate increase in home insurance premiums from last April.

“We’ve taken a balanced approach to minimise the impact on customers by spreading the adjustment across the entire portfolio and revising the policy deductibles where appropriate,” Mr Nair said.

“Despite receiving an influx of over 2,100 claims on that single day, Adnic was able to respond swiftly and effectively. We’re proud to note that, to date, we have not received any formal complaints through any of the authorities regarding our claim handling.”

Mr Nair said there are still pending claims with Adnic related to repair works. “In these cases, we are awaiting final invoices from clients,” he added.

He recalls the time of the heavy rains and says it was an exceptionally busy period from a claim-servicing perspective.

“We experienced close to five times the normal claims volumes compared to the same month in the previous year," he said. He urged homeowners to conduct regular maintenance, especially related to waterproofing, plumbing and drainage works.

“It would be prudent for all homeowners to enter into annual maintenance contracts with recognised maintenance companies,” he added.

In Dubai’s Green Community West, Rubesh Pillai told The National that the first floor of his villa was filled with water and is still in need of repair. The reason for this, he said, was that the offer from his insurance company was so small that it would not come close to covering the cost of repairs.

“The water was nearly a metre inside the house, which damages the furniture and caused mould to form on the walls,” the Sri Lankan businessman said. “The mould and damage was extensive and affected my health. I had to go to Sri Lanka twice for lung treatment caused by the mould.”

The 60-year-old said his family's four cars were also damaged due to the heavy rainfall. “The insurance company didn’t reply to my calls and emails until October last year. I kept holding the line for hours waiting without reply," he said.

Mr Pillai could not wait any more and took his cars to a garage, where he had to pay Dh55,000 himself for the repairs. When the insurance company finally got in touch with him, they asked him to take the cars to a specific garage for repair.

“I told them I already repaired them and demanded them to pay me the cost, but they refused and didn’t pay,” he said.

Unwanted memories

Mr Pillai recalled the aftermath and the toll it took on him and his family. “We couldn’t flush the toilets because it all came bubbling back up. We were using wipes to clean ourselves,” he said. “I don’t want to remember these days.”

As the family were running out of food and water, the support they received from friends and the wider community was remarkable, he said. “I was surprised by the help from friends and people that I didn’t expect, like friends supplying us with food for days. It is the beauty of living in a city like Dubai,” he added.

For 65-year-old British resident John Metcalf, the heavy rainfall caused extensive damage to his three-bedroom ground-floor apartment, as contaminated rainwater gathered around in the Green Community and inundated the apartment, causing extensive damage to the apartment building, furniture fixtures and contents.

“The water rose rapidly to four feet both inside and outside the apartment due to the breaching of the pond at the backyard and the flood water entering from the front,” Mr Metcalf told The National. “The rainwater caused an electrical short circuit causing power to shut down and damage to many electrical and electronic gadgets and appliances. It was a mess.”

He left the apartment and stayed in a hotel for two weeks as it was impossible to access the property until the water receded, after which it took several more weeks before power was restored to the building. He used a private company to issue a damage survey report which confirmed that his financial losses were more than Dh740,000.

“Neither the buildings or contents insurance paid a penny until today. I spent around Dh400,000 on interior work to return to my apartment,” he added. “I had 12 damaged wooden doors due to the water and the developer only paid to replace the front door.”

Despite sending emails with receipts and quotations attached to his insurance company, he was only offered partial payments and has yet to reach an agreement with them, which has resulted in him receiving no money from them yet.

“The insurance company have been slow to respond and unhelpful. I’m still waiting for them to settle my claims,” he added.

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