Owners to feel the heat of rising insurance premiums

Dubai: Even before the latest incident of a fire breakout at a high-rise in Dubai, insurers were increasing the size of the insurance premiums the owners had to pay. In some instances, the increases have been in the range of Dh1 million and over at the time of the insurance cover renewal.
“Fire insurance premium hit rock bottom by early 2014 ... however, the rates quoted in Dubai is not supported by the international market,” said Mustafa Vazayil, Managing Director at Gargash Insurance, the brokerage services firm. “But since plenty of capacity was available in the local market — through reinsurance treaties — companies started offering each other reinsurance support at unsustainable rates.
“This has slowly changed since the international reinsurers who provide capacity to local markets are now tightening up, albeit very slowly. This — and the number of very large fires in the UAE — has resulted in some firming up of the rates. The average rate is still very low and sustainable international rates are twice as high.”
All of which could mean that Dubai’s high-rise apartment owners could be facing higher payouts on their properties’ insurance covers. But going forward, property owners would do well to get a handle on what they want insured.
“The RERA (Real Estate Regulatory Agency) laws require insurance coverage of the common property only,” said PR Vijayakumar, Managing Director at Pacific Owners Association Management Services. “This is because units vary in the valuation of their personal belongings, including furniture and furnishings.
“We strongly recommend to owners and tenants to take a ‘personal contents’ policy on their own, to the value they deem is required to replace them in an unfortunate event.
“Although we, as association managers, take every opportunity to create awareness of this, we are very unhappy with the lack of interest among the tenants and owners to take such a policy. They need reminding that all buildings are now insured, but exclude the personal contents inside the individual units.”

Source: Manoj Nair, Associate Editor, gulfnews.com


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