Explore the evolving landscape of property insurance in the UAE in this Gulf News interview with Gargash Insurance's MD, Mr. Mustafa Vazayil.

For quite a few years, the property insurance sector, and by extension, its customers, have been benefiting from the property boom in the UAE – continuous construction combined with price rises and reasonable level of claims has meant the availability of reinsurance capacity and relatively low premiums. Year after year, the premiums have, if anything, gone down because there were no catastrophic nature claims, and the high competition meant it was primarily a buyer’s market,” says Mustafa Oliyath Vazayil, Managing Director of Gargash Insurance, a leading insurance intermediary.
The floods in April this year changed the dynamics. Insurers lost billions, reinsurers reduced their capacity, and premiums soared.
“This is not just a UAE scenario; it’s an overall global trend with regard to natural calamities caused by global warming, due to which capacity is shrinking,” explains Vazayil.

Learning curve

However, this difficult year has brought with it considerable awareness, both among insurers  and  their  customers. During the earlier period of overcapacity in the market, both insurers and clients alike were perhaps less than diligent with risk management, but the fallout from April has taught them otherwise, says Vazayil.
“From the insurer’s point of view, they now realise such events are not going to be a once-in-25-years scenario, and they need to be more diligent in risk inspections and ratings,” he says. “And clients have become more responsible and proactive in understanding how to protect their premises with regard to potential losses.” 

Assessing risk

A big part of this is understanding the risk exposure for your kind of property, and this is where a company such as Gargash Insurance, with over 30 years of experience in insurance broking in the UAE, can help. “If you have a warehouse with inflammable materials, your risk is different from when you have an office block that is concrete or well-constructed,” says Vazayil. “For insurance rating purposes, property is generally classified into four or five types, then subdivided based on occupation.”
The same applies for your home, whether you’re an owner or a renter. If you live in a multi-owner building, then you need to be aware of the strata insurance cover being provided for the common areas. Home and contents insurance must be chosen carefully ensuring you’re adequately protecting your assets, whether it’s electronics, furniture or jewellery, as well as providing yourself with third-party liability coverage.

And it doesn’t really matter whether the property sector is going through an upturn or a downturn, says Vazayil. “Our job is to ensure that a development or project has adequate construction insurance while being built and when it’s completed, that it’s just as adequately protected by all the kinds of insurance it needs. Boom or bust, every property needs to be and should be insured.