UAE: Reinsurers raise premiums & tighten terms for fire business
Source: Middle East Insurance Review | Dec 2016
Insurance companies operating in the UAE are facing difficulty in reinsuring fire risks, particularly for old buildings with flammable claddings as premiums and terms have tightened for upcoming renewals, said insurance industry players.
The funds of direct insurers are not sufficient for them to retain a large percentage of the premiums underwritten in this class of business, so they have to accept conditions imposed by international reinsurers, reported Emirates Today citing industry sources. They pointed out that the stringent reinsurance terms and conditions are reflected in the high premiums demanded by reinsurers depending on the nature of the building to be insured.
Mr Jihad Faitrouni, CEO of Dubai Islamic Insurance & Reinsurance Company (AMAN), said that local companies face many adjustments to fire insurance prices and conditions which are imposed by reinsurers lately, taking into account recent fires in high-rise towers.
He noted that reinsurers have also resorted to hazard classification, especially for buildings that have flammable claddings, as well as high-rise buildings, particularly residential ones.
Insurance brokers have noticed increases in reinsurance premium rates for fire insurance, ranging between 5% and 50% depending on the type of building, the materials used in the construction, the geographic location, and other factors.