UAE residents should brace themselves for a possible rise in auto and property insurance costs. This comes after S&P Global Ratings, a credit rating agency, predicted a continuation of the upward trend in insurance premiums. The agency cited rising claim frequency and severity, particularly in the wake of recent floods in the UAE, as a key factor driving the potential increase.
Motor insurance premiums have already witnessed significant hikes in the past year, with some insurers raising prices by up to 50% for specific coverage options. S&P Global Ratings expects this trend to persist as insurance companies grapple with the increasing cost of repairs and settlements. The recent floods have further exacerbated the situation, prompting insurers and reinsurers to re-evaluate their risk profiles and pricing strategies for property coverage.
The potential rise in insurance premiums is likely to impact both commercial and residential property owners. Insurers are expected to adjust their rates to account for the growing risk of flood damage and other weather-related perils. This could lead to higher costs for businesses and homeowners alike.
While the exact extent of the premium increase remains uncertain, experts anticipate a moderate rise in the range of 5 to 10% for car insurance and a potentially steeper increase for property insurance, depending on the location and type of property.
The anticipated rise in insurance costs comes amidst a broader trend of increasing insurance penetration in the UAE. The insurance market in the country is still evolving, with a current penetration rate (measured by gross written premiums divided by gross domestic product) falling below the global average. However, the recent developments are likely to accelerate insurance uptake as property owners become more aware of the financial risks associated with extreme weather events.
For UAE residents, the potential increase in insurance premiums could lead to a strain on household budgets. However, it's important to consider that comprehensive insurance coverage provides a vital financial safety net in the event of an accident, theft, or damage to a property. By carefully comparing quotes from different insurers and opting for plans with the right level of coverage, residents can mitigate the impact of rising premiums while ensuring they are adequately protected.