Middle East - UAE: Insurers modifying conditions in fire insurance policies
Source: Middle East Insurance Review | Jun 2016
UAE insurance companies have begun to modify the terms and conditions of fire insurance contracts, under pressure from international reinsurers. They may also introduce mechanisms to reduce potential losses in this class of business.
The move suggests that fire insurance premiums could rise this year, reported Emirates Today, citing executives working in insurance brokerage and consulting companies. The fire insurance price review could affect old facilities and residential towers given the nature of the material used in such buildings.
Mr Musa Al Shawahin, Executive Director of Me Partners Insurance Consultants, said that insurance companies operating in the local market rely on reinsurance for a large part of underwritten risks. He said that there is pressure to raise fire premiums given the spate of fires in the UAE. Among these was the 31 December 2015 fire at the Address Downtown Dubai hotel.
He said that amendments to fire policy terms could include reductions in compensation rates in the case of repeated incidents, adding that parties to the insurance contract should read it carefully before signing it.
Mr George Ashkar, Managing Director of Gateway International Assurance, an insurance agency, said that some insurance companies in the domestic market have been modifying the terms of insurance contracts on fire at renewal. They have also discussed premium increases especially for installations with high fire risk.
He said: “Compared to international markets, the fire insurance rates in the local market are still low by a large margin, especially in light of intense price competition in the market.”