ABU DHABI // Crashes involving several vehicles often lead to extremely high insurance payouts and legal battles between insurers and policyholders.
But having a policy does not give you the right to have an accident, said Fawaz Moukayed, chief executive of Guardian Insurance Brokers.
“It covers the unforeseen or improbable, it covers your negligence,” said Mr Moukayed. “Insurance companies should educate members about their rights as well as their obligations, which include abiding by the traffic rules.”
Mr Moukayed's advice comes after a 57-car pile-up on the motorway between Abu Dhabi and Al Ain on January 16, in which 14 people were injured.
One motorist was seriously hurt and the rest suffered minor injuries, police said.
About 80 cars were involved in a series of early-morning pile-ups on Friday as dense fog blanketed both carriageways of the Abu Dhabi to Dubai road. The number and extent of injuries have not been revealed.
Pile-ups can be complex, with investigators taking details of each car, position, driver and the weather conditions to check whose negligence set off the chain reaction.
Although eData Management Solution in Dubai does not have data on actual costs, Pascal Persoon, its chief executive, said these would involve damage to vehicles, medical costs, police, ambulance, Civil Defence and towing, insurance and opportunity loss since drivers were not able to work, arrived late at the office or missed their business appointments.
“It will be a huge amount,” said Mr Moukayed, who has been in the insurance industry for 33 years. “Any car will cost not less than Dh15,000 and Dh20,000, and in a worst-case scenario it could be a total loss.”
A vehicle is considered a total loss when the cost of the repairs is greater than the value of the car, or if the necessary repairs cannot be carried out safely or economically.
Last week’s incident “will be a huge claim that will cost millions”, said the head of an insurance firm in Abu Dhabi, who did not want to be named. “It will be catastrophic for the insurance industry.”
Mr Moukayed said: “It is difficult to put an estimate to the total cost. The involved cars could be a Bentley, a Mercedes, while others are Hyundais or Kias.
“One could have a scratch that costs Dh500 to Dh1,000 to repair, or it could be a total loss of Dh1 million.”
Freight companies in the US must have large liability policies should they have an accident affecting other vehicles, said Glenn Havinoviski, an associate vice president of transport systems at Iteris, a US traffic-management company.
“If it is mainly an accident started by individuals in private vehicles, it becomes a more complex issue on the level of insurance the driver is carrying,” he said.
In the UAE, the third-party liability for bodily injuries is unlimited and is taken care of by insurance companies.
“Individuals have no liability because they are covered by the motor policy, provided they are driving within the limitations of the insurance contract,” Mr Moukayed said.
For example, “a policy does not cover accidents when the driver is under the influence of alcohol”.
The Government requires insurance companies to compensate any third party in terms of property damage and bodily injuries.
“But the insurance company has the right to come back with the legal action against the insured,” Mr Moukayed said.
Killing of Qassem Suleimani
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
