It could so easily have been avoided.
Investigators believe the fire in Tamweel Tower was started by a lit cigarette butt, which ignited a pile of rubbish at the bottom of the building. Flames quickly licked up the sides of the tower, taking just 10 minutes to reach the top.
Yet a little more than two years on from the fire in Dubai’s Jumeirah Lakes Towers, the building remains closed.
“I use that as an example in some of the seminars that I do,” says Andrew Scanlan, a financial adviser based in Dubai. “Most people didn’t have insurance.”
They are not alone.
People living in the UAE are at least three to four times less insured than those living in countries with comparable economies, according to Alexis de Beauregard, the chief officer for marketing, retail, digital and SME at Axa Gulf.
Insurers, which see the market as both a challenge and one brimming with opportunity, are now seeking alternative ways to encourage people to buy policies.
Last month, Zurich teamed up with Air Miles to offer customers 1 mile for every dirham they spend on car, home or travel insurance.
The deal was partly inspired by the companies’ long-standing mutual partnership with HSBC, according to Brian Reilly, the chief executive of Zurich Middle East.
“Also we have been looking at different ways for trying to market these products to the consumer, other than just the usual traditional advertising through mailshots and newspaper ads,” he adds.
People buy car insurance first, Mr Reilly says, because it is compulsory. Health insurance comes next in perceived need.
“But home and travel, accident and [life], even SME businesses. Many of them don’t think that much about buying insurance,” he adds.
So why, when vast swathes of the country are wealthy and many people here have expensive possessions, do we have to be enticed to buy insurance to protect them, and ourselves?
A 2012 survey conducted by YouGov for Zurich found that more than half of UAE residents never buy travel insurance when they go abroad, while a third said they only occasionally do. But the company estimates that the actual penetration rate is just 6 per cent.
“I think the average number of overseas journeys people make every year is 4.8 and only 6 per cent would buy any travel insurance. If you compare it to the UK, 90 per cent of people buy travel insurance and they probably only travel once or twice a year,” says Mr Reilly.
Mr de Beauregard thinks a big part of that is simply due to a lack of awareness. He says many think travel insurance only protects people if they lose their suitcase or need to cancel their ticket, but its real value comes in the event of a medical emergency abroad.
However, it could also be because people here are wealthier and more willing to write off risk.
“They are much more inclined to risk it because they travel a lot and they get very blasé,” says Mr Scanlan.
But it seems many have the same attitude towards their homes and lives here. Axa estimates that only about 5 per cent of people in the UAE buy home insurance.
“People are living at risk. It is not a threat,” says Mr de Beauregard. “If a flowerpot falls from your balcony in your tower and hurts someone, or a car, or whatever, it is third-party liability. If the owner or the one who suffered any damage decided to go to court and ask for compensation, only 5 per cent of residents in the UAE are insured for that,” he adds.
Insurers believe the low penetration of home insurance is again due to people’s perception of risk – or more to the point, a lack of it.
Mr Reilly says: “We live in what can be described as a benign environment in the UAE. There is little crime, and we don’t have natural disasters like floods or earthquakes so people tend to think, ‘do I really need insurance?’
“But you know, unfortunately things do happen. A burst water tank and leaking air conditioners are incredibly common.”
Could the reason also be because for 90 per cent of us living here, the UAE is only our temporary home?
“I used to think that, but when I lived in Hong Kong and Singapore for a number of years, expats tended to buy home insurance and travel insurance there,” says Mr Reilly.
“Most were on a three to five-year life cycle. In the UAE most people have a three to five-year time horizon in mind, but there does seem to be something that lulls people into that false sense of security,” he says. “It’s maybe naivety that they don’t think anything is going to happen to them.”
Perhaps this also explains why so few of us purchase critical illness insurance. The penetration rate is estimated to be less than 5 per cent, according to Mr Scanlan, despite a high incidence of critical illnesses here.
“Most people are not aware that is something that is available to them and they are also generally not aware of the prevalence of this type of illness,” he says. “[The UAE] is in the top 10 countries in the world for diabetes prevalence, which is frightening. But because of lifestyles here there is a generally higher risk for heart disease, cancer and diabetes.”
Penetration rates for life insurance are no better. While it represents 25 per cent of the total insurance premiums generated in the UAE, according to Mr de Beauregard, almost two thirds of UAE residents do not have a life insurance policy that would protect their family in the event of the death of the primary earner, according to a survey last year by Zurich. “Awareness of it is very low but also because you don’t have any pensions system … life and savings products are very popular in countries where it is seen as … a complementary product for pensions,” says Mr de Beauregard.
He believes a lack of awareness is also the reason why the rate of penetration of SME insurance is so low at about 15 to 20 per cent. But it is increasing fast.
“It is one of the fastest [growing] customer segments, at least for ourselves. We are very active in the SME field and the potential is huge because SMEs have cash flow issues and they understand that they are not going to be able to suffer any losses or damages,” says Mr de Beauregard.
But until residents also come to the same conclusion, travel, home, life, accident and critical illness insurance penetration rates will remain low in the UAE.
pf@thenational.ae
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