Low Uptake of Rain Insurance Among UAE Shop Owners Despite Severe April Floods

Despite the catastrophic floods on April 16 that caused extensive financial losses for retailers across the UAE, the uptake of rain insurance coverage among shop owners remains surprisingly low. However, industry experts have observed a notable increase in demand for warehouse insurance policies in the aftermath, as businesses seek to protect their stored goods from similar future risks.

The April 16 floods, which resulted from the heaviest rainfall the UAE has experienced in 75 years, led to widespread disruption for both small and large businesses. Properties and vehicles were severely damaged, leaving many retailers struggling to recover. Despite this, the anticipated surge in interest for shop insurance has not materialized.

“Typically, following such incidents, one would expect a surge in interest among retailers to insure their shops. However, this trend was not observed,” said Avinash Babur, CEO of Insurancemarket.ae. Interestingly, we noted a significant uptick in interest in warehouse insurance among business owners, with inquiries increasing by nearly 20 percent. This indicates a growing awareness of the need to protect larger storage facilities from similar risks.”

Anas Mistareehi, CEO of eSanad, also highlighted that while there was a noticeable increase in inquiries about property insurance coverage after the floods, actual purchases remained low. He attributed this to a lack of awareness about the extent of coverage and the protection it offers.

Insurers in the UAE reported a significant increase in claims due to the record rains, particularly related to vehicle damage. Areas in Dubai, Sharjah, and Ajman were heavily affected, with some regions remaining flooded for several days after the rain.

Retailers typically have access to a range of insurance options based on their specific needs. The most basic coverage involves a stand-alone “Property All Risks” (PAR) policy, which covers damages from water, rain, fire, theft, and other natural disasters. Many retailers opt for comprehensive packaged policies that also include public liability and workmen’s compensation, offering a more holistic approach to risk management.

Mistareehi stressed the importance of insurance as a vital investment for retailers, especially in light of the severe impact of the April rains. “The situation was new for most, leaving many unprepared and resulting in significant losses. Retailers with insurance experienced minimal disruption, while those without it suffered considerable financial damage, with some nearly seeing their businesses collapse.”

Avinash Babur echoed this sentiment, noting a 45 percent increase in general insurance claims since the floods, predominantly due to flood-related damages. He strongly advised shop owners to invest in rain insurance policies to protect their assets, including furniture, fixtures, equipment, and stock against water damage. Such coverage, he emphasized, is essential for maintaining business continuity and ensuring a swift recovery from disruptions caused by rain or flooding.