Premiums for buildings that still have flammable cladding will cost more than newer structures that comply with the recently released UAE Fire and Life Safety Code.
Insurers would not say by how much the premiums may increase, but expectations are that price hikes will not be exorbitant, reported The National.
The aluminium cladding with a flammable core has been blamed for several fires, including the 2015 New Year’s Eve blaze at The Address Downtown Dubai and the one at Tamweel Towers five years ago.
“The market for such high-rise buildings with combustible cladding has already hardened since last year,” said Mr Toby Sizeland, Chief Commerical Lines P&C Officer, AXA Insurance (Gulf). “There has been much awareness in the market and a major thrust in fire safety standards and management.
“The market is going to see differential pricing for buildings built to the new Code than the older version. This impact is likely to smooth out over time.”
The full effect of the new Code, which was introduced in January, and insurance pricing will take some time to mature, Mr Sizeland said.
There will be clear disclosure of fire risk and building materials used when customers apply to purchase insurance, said Mr Prabhat Singh, Senior Vice President of Oman Insurance.
“Premiums are calculated based on an intricate set of factors such as the level of risk exposure and quality of risk-management programmes in place, and may be higher for old buildings with flammable cladding,” Mr Singh said.
“But we do have historical lessons now that will assist us in capping premiums at a reasonable point, so the market is unlikely to witness exaggerated demands.”