Almost one year after floods, UAE insurance costs keep surging

• 15% price rise for property cover in Q4
• Insurers accelerate April flood payouts
• $8.5bn of damage done after record rainfall

Property insurance rates in the UAE jumped by up to 15 percent in the final quarter of 2024 as insurers adjusted prices after last April’s flash floods.

The rise, the largest quarterly increase on record, came as UAE insurers accelerated payouts for flood claims, according to the insurance broker Marsh.

Omar Gemei, global head of placement at Marsh, told AGBI that catastrophe-related insurance for commercial and residential property rose as much as 5 percent in the third quarter, and 15 percent in the fourth.

This reflects the region’s challenges “as insurers adapt to heightened risks and increased competition from new market entrants,” he said.

The reinsurance broker Gallagher Re estimated that the insured property and auto losses from the record rainfall and flooding last year totalled nearly $3 billion.

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The storm, which also hit Oman and Bahrain, caused more than $8.5 billion of property damage and business interruption overall, Gallagher Re said.

The main drivers of the fourth-quarter rate rises were higher reinsurance costs and increased risk pricing, particularly for “catastrophe-exposed” portfolios, Gemei said.

By contrast, “loss-free and well-engineered properties” have had rate reductions, as insurers adopt a more selective pricing strategy, he said.

Moody’s Investors Service warned last year that Gulf insurers face mounting reinsurance costs and stricter policy terms as extreme weather events become more frequent.

The Gulf Arab region has experienced seven storms and cyclones in the past five years, up from four in the previous five-year period.