Dubai fires: Too hot to handle?

Insurance companies say that they would be 'more cautious' and 'selective' while underwriting warehouses. They would also consider classifying Al Quoz and Jebel Ali as fire 'hotspots'.

Sanjay Verma, Resident Manager at the Oriental Insurance company in Dubai, which faces major claims after the fires, told Khaleej Times that the insurance companies would consider a change in the policies in view of the recent fires.

'We will now think several times before underwriting warehouses and would select them based on the area, the warehouse and the contents they store. We will not give insurance cover to warehouses alone anymore, instead would prefer to underwrite clients having a clutch of portfolios which might include warehouses too,' he said.

He added that more rigorous risk surveys would be conducted henceforth. 'We will impose certain terms and conditions on clients like insisting that their firefighting equipment should be in good condition and that their employees must be trained in firefighting,' added Verma. The company has had initial claims of about Dh25 million from the fire that broke out last week in Al Quoz, which destroyed more than 80 warehouses.

'The recent fires will make insurance companies more restrictive in accepting applications for insurance by warehouses. The companies will double check to ensure that all fire safety measures are in place and the firefighting facilities are adequate,' said Ahmad Hassan, senior manager for fire and miscellaneous underwriting of Oman Insurance. He added that the recent incidents would adversely affect the UAE insurance market.

Experts also observed that warehouses are prone to fires. Most of them are old and the methods of storing materials are obsolete. They also noted that reinsurance treaties would now cost much more because of the increased incidents of fire this year. They also hoped that regular inspections would be carried out by the authorities concerned.

'Insurance companies have already pulled out from Sharjah industrial areas following the several fires over the last few years. Clustering of warehouses should be avoided and all electric wiring needed overhauling,' said an official ofa Dubai-based insurance company, who did not want to be named.