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In a groundbreaking move for the Middle East’s insurance sector, Al Fujairah National Insurance Co. has launched ‘FloodGuard’, the region’s first flood cover for car owners with third-party insurance policies. This innovative product addresses a critical gap in the market, offering protection against water damage for vehicles not covered by comprehensive insurance.

FloodGuard: Responding to a Growing Need

The introduction of FloodGuard comes in the wake of severe flooding that struck the UAE in April 2024. These unprecedented rains caused extensive damage to vehicles, particularly affecting owners with only third-party insurance coverage. Many cars suffered irreparable damage, leading to total write-offs and significant financial losses for owners.

Antoine Najib Maalouli, CEO of Al Fujairah National Insurance Co., explained the rationale behind the new product: “Comprehensive insurance already provides flood protection risk cover for car owners in the UAE. But there is this vast pool of third-party motor insurance holders who would look to take the FloodGuard cover.”

Key Features of FloodGuard

1. Coverage: Protection against damage from floods, water inundation, storms, and tempests
2. Target Market: Specifically designed for third-party motor insurance policyholders
3. Premium: Annual cost set at AED 300-350
4. Coverage Limits: Policyholders can choose between AED 25,000 or AED 50,000 for a 12-month term

The Impact of April 2024 Floods

The April 2024 floods in the UAE were a wake-up call for both insurers and vehicle owners. The event exposed vulnerabilities in existing insurance coverage and highlighted the need for specialized products like FloodGuard.

Maalouli noted, “It was third-party motor vehicle owners who suffered the most from the April rains. We started on creating this flood risk cover targeted at these car owners almost immediately. I would say we are the first insurer in the Middle East to come up with such a risk cover.”

Rising Insurance Premiums

In the aftermath of the floods, the UAE has seen a significant increase in motor insurance premiums, with electric vehicles (EVs) experiencing particularly steep rises. This trend extends across all major insurance categories, reflecting the heavy claims resulting from the April flooding.

According to industry estimates shared by Maalouli,

“Based on what our reinsurance partners are saying, the scale of the losses sustained by insurers is close to $3 billion. Many insurance companies were significantly affected and so were the reinsurers. It explains why premiums have been rising all round.”

The Future of Flood Insurance in the UAE

The introduction of FloodGuard by Al Fujairah National Insurance Co. may set a new standard in the UAE’s insurance market. As climate change increases the likelihood of extreme weather events, other insurers may follow suit with similar products.

For car owners in the UAE, especially those with third-party insurance, FloodGuard offers a valuable option to protect against unforeseen water damage. As awareness of this new product grows, it could become an essential consideration for vehicle owners across the region.

Conclusion

The launch of FloodGuard represents a significant step forward in addressing the evolving needs of car owners in the UAE. By offering affordable flood protection to a previously underserved segment of the market, Al Fujairah National Insurance Co. has demonstrated innovation and responsiveness in the face of changing environmental conditions.

As the UAE continues to develop its infrastructure and adapt to climate challenges, products like FloodGuard may become increasingly important in safeguarding personal assets and promoting financial resilience among residents.