SOUTH JORDAN, Utah — Record-breaking rainfall struck the Arabian Gulf from April 14 to April 17, 2024, causing devastating floods that have particularly impacted Oman and the UAE. Preliminary estimates by Guy Carpenter Cat Resource Center suggest that insured property losses in the UAE alone could range between $650 million to $850 million as a result of the deluge.
The National Center of Meteorology highlighted this weather event as extraordinary, marking the UAE’s heaviest rainfall since 1949. Over the course of four days, the UAE received upwards of 259.5 mm (10.2 inches) of rain, shattering previous records and overwhelming the region’s infrastructure.
In Oman, the National Committee for Emergency Management reported similarly extreme weather conditions, with some areas receiving as much as 180 mm of rain from April 14 to April 16. The severity of these storms has drawn comparisons to a similar event in 2016 when Dubai experienced over 240 mm of rainfall within a few hours.
The flooding has wreaked havoc on critical infrastructure across affected areas. In Dubai, the disruption extended to the bustling airport where over 1,500 flights were either delayed or canceled over three days, echoing the broader transportation and economic disruptions.
Significant property and vehicular damages were also reported, with Guy Carpenter noting that between 30,000 to 50,000 motor vehicles were impacted, predominantly in Dubai. The majority of these vehicles will only see insurance claims met if covered under comprehensive policies.
The flooding underscores the low insurance penetration in the Middle East, which remains significantly below global averages. In the UAE, insurance penetration is about 2.75%, with Saudi Arabia and Qatar recording even lower rates at approximately 1.5% and 1%, respectively. This gap indicates that a vast majority of the population lacks adequate coverage for such catastrophic events.
Guy Carpenter points to a lack of awareness and understanding of insurance products as primary barriers, alongside sluggish market growth relative to the economic development in the region. The aftermath of the floods is likely to catalyze a shift in both public perception and industry practices regarding insurance.
The extensive damage and subsequent financial impact are expected to prompt several changes within the insurance sector:
Increased Insurance Awareness: Anticipated to rise among both personal and commercial lines.
Surge in Claims: Insurers are preparing for a significant increase in claims related to vehicle repairs, property damages, and business interruptions.
Financial Strain on Insurers: Companies may need to utilize reserves or seek reinsurance solutions to manage the impending financial strain.
Market Dynamics: The industry might see adjustments in risk assessment, underwriting practices, and policy pricing, which could alter the competitive landscape.
As the region recovers and reassesses in the wake of these unprecedented floods, the focus will intensify on improving resilience against natural disasters and enhancing the public’s understanding of insurance mechanisms. The incident not only highlights the vulnerabilities of the affected regions but also the critical role of insurance in mitigating financial losses associated with natural catastrophes.
