Recent flooding in the United Arab Emirates, Bahrain, and Oman has potentially generated insured losses of up to $850 million, according to a report from reinsurance broker Guy Carpenter.
The flooding, which occurred between April 14-17, resulted in preliminary estimated insured property losses that could exceed $650 million, with Dubai experiencing the most severe impact.
Guy Carpenter detailed that the estimated damage to motor vehicles in the UAE alone ranges between 30,000 and 50,000, predominantly in Dubai. The losses for motor insurance are projected to exceed $150 million and could rise up to $250 million.
It was also noted that only vehicles covered under comprehensive insurance policies are eligible for claims, as third-party liability policies do not typically cover damages from natural catastrophes.
The report also highlights significant infrastructure damage, affecting roads, vehicles, buildings, and public facilities, necessitating extensive repair and restoration efforts. This damage extends to residential units, commercial outlets, malls, warehouses, and industrial units, leading to substantial financial losses for businesses due to interrupted operations and property damage.
Guy Carpenter further noted that the storms brought unprecedented rainfall to the region, with the UAE receiving up to 10.2 inches of rain over the four-day period, the highest in 75 years, which caused widespread flooding and disruptions, including power outages, school and business closures, and flight cancellations and delays at Dubai International Airport.
In its commentary, AM Best anticipates a surge in claims for motor, property, and business interruption insurance. The commentary suggests that despite the high costs of damages, the extensive reinsurance coverage in the region should help maintain the financial impact on UAE's primary insurers at a manageable level.
The credit agency notes that the flooding in March 2024 had already strained the insurers, particularly affecting the motor insurance segment, which retains most of the natural catastrophe risks.
This recent event is expected to further impact the performance of motor insurance portfolios adversely.
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