61% of Dubai residents without home insurance

The Torch building in Dubai, one of the tallest residential buildings in the world, was literally ablaze in February.

More than 100 apartments in the 86-story building were severely damaged by fire, and few of the residents had home rental insurance.

A recent study conducted by MoveSouq.com and RSA Insurance found that 61 percent of Dubai homes are uninsured. The survey found that only slightly more than a quarter of renters have insurance. While health and car policies remain at the highest level of penetration, most people forgo coverage for their personal properties.

Gulf News Journal sat down with David Harris, RSA's sales director for the United Arab Emirates and Bahrain, to find out why the residents of Dubai aren’t buying rental insurance despite high rates of fire and damage from air conditioning units.

GN: Can you tell me how the survey was conducted? Where did you get respondents?
DH: The survey was conducted online through Movesouq’s website, where visitors were asked to participate in the survey about their sentiments toward home insurance. It was conducted in August 2015 and was based on the responses of over 200 employed respondents in Dubai.

GN: How often does major damage occur to rental properties in Dubai?
DH: There have been a number of incidents over the past year where property has been severely damaged due to fires. Most recently, there was one in Nasser Tower in Sharjah, while another incident earlier this year was the fire at the Torch Tower in Dubai. Other than these types of incidents, we also see that property is often damaged due to burst pipes resulting from wear and tear or maintenance issues.

While we see that most people tend to reassure themselves that it is unlikely that they would be the victims of these types of unfortunate events, no one is completely safe as it is impossible to predict if and when these incidents may arise. By applying for home content insurance, people can overcome these risks and secure their peace of mind.

GN: What is the average cost of damage for the most frequent types of incidents to rental properties?
DH: The most frequent damage occurs due to burst pipes and water leakage, which costs individuals without insurance approximately ($3,267) on average to repair. As these types of incidents are covered under insurance, these issues can easily be avoided.

GN: What would home content insurance policies cover?
DH: Home insurance provides protection for a wide variety of incidents including natural calamities such as storms, floods, lightning and earthquakes. It also includes coverage for fire, explosion, smoke and water damage. Accidental damage of contents and loss of money up to ($272) in addition to protection from theft, damage from attempted burglary and vandals is also covered.

In terms of contents, RSA offers ample cover for objects within the house, including immovable items such as furniture and personal possessions, such as mobile phones, watches, jewelry, expensive rugs and carpets, and paintings. In addition to providing the most comprehensive services in the market, RSA’s rates are also very competitive.

GN: What is the penetration level for home content insurance in the West?
DH: We see that the (Gulf Cooperation Council) exhibits substantially lower penetration levels of home and content insurance in comparison to the West; for example, approximately 76 percent of residents in the UK have some sort of a home insurance policy.

We always notice a surge in inquiries following unfortunate incidents. For example, we have seen a 400 percent increase in inquiries and 90 percent increase in policy purchases following the Torch Tower fire. However, it is often only in the immediate period following these events that residents are willing to purchase policies, but this attitude seems to then wane over time.

GN: Why are Dubai levels of rental insurance and home content insurance so low?
DH: The reason why home and content insurance penetration rates across the country remain far lower than more mature markets appears to primarily be based on different cultural attitudes. While Western expats are aware of these products, the highly transitory nature of this demographic means that they see their stay in the UAE as temporary, due to which they do not think it is necessary to buy home insurance.

With regards to the South Asian and Arab expats, we see that there is a lack of awareness about the importance of these products and an incorrect perception that these services are expensive, which ultimately leaves many of their precious contents exposed in times of emergencies. Additionally, as a large proportion of the UAE residents are not homeowners, they often opt to disregard the need for home insurance.

GN: In the press release, you stated that RSA is "changing these perceptions and educating the community about the value of these services." Can you give me examples of what RSA is doing?
DH: RSA carries out a host of initiatives designed to educate customers about the importance of home insurance. As we are focused on building long-term relationships with our customers, we often sit with them to discuss how and why it is important for them to protect their home and contents. Our partnership with Movesouq to create this survey and raise awareness for the lack of home insurance in the UAE is another way in which we look to educate the public about the need for these services.

GN: How much would a rental insurance policy cost a tenant?
DH: The cost of home and contents insurance policies differ based on the type of the product and the extent of the coverage required. For those not familiar with this service, we have developed a packaged product that provides cover against fire, natural calamities and damages from third parties up to a certain limit, which starts at ($5.72) per month – less than (21 cents) per day.

At the same time, those looking for more extensive coverage can apply for Declared Sum insurance, which allows customers to define their list of items to be protected and estimate their value.

GN: Are there any laws in the UAE requiring any type of home or property insurance for owners or renters?
DH: At the moment, there are no laws in the UAE requiring individuals to subscribe for home or contents insurance.