The news of a recent Jumeirah Lake Towers (JLT) fire in Dubai has led to a sudden rush for Home Contents Insurance purchase as well as a range of other types of policies, and raised an important issue as to whether expats in Dubai are fully aware of their insurance options.
In Dubai two popular insurance companies, AXA Insurance Gulf and Royal & Sun Alliance (RSA), have seen quote requests spike 2000% since the JLT fire. Likewise, actual sales of contents insurance have also increased dramatically. Leading insurance broker in the UAE, Medstar XXX, has reported similar levels of increased activity. Its clients have responded to news of the fire by looking not just for home insurance, but a range of other types of policies, specifically life and health insurance.
Living in an expat environment appears to cause some foreigners to forget about the importance of insurance. With less legal requirement for insurance in Dubai than many other countries, there is concern that there is an increasing trend of expats remaining uninsured. Recent studies found that the penetration rate for home contents insurance was only 5% and that 86% of homes in Dubai are without contents insurance despite 95% of people believing it to be a valuable asset (according to research by souqalmal.com). Whether to take out insurance is of course a question of risk assessment, but how much risk should an expat take?
Surveys show that the first 2 years of expat life is when the most costly unforeseen expenses occur. For expats, this comes in the form of unexpected medical bills, relocation costs, visa processing fees and travel costs etc. Medical costs in the UAE are among some of the highest in the world and account for some of the largest expenses an expat will have to pay. It can be argued that medical insurance should be one of the first considerations upon relocating overseas however, statistics show that car insurance is the most frequently purchased insurance (most likely due to the fact that it is compulsory to purchase).
It is important for expats to set aside time to think about the other important insurance aspects of moving abroad. It is expected that the majority of people will value their health over their car, yet health insurance is usually one of the last things that expats consider purchasing, if they consider it at all. Expats generally spend more time figuring out other issues first such as their accommodation, transportation, schooling etc. However, in a country where one night's stay in hospital can cost you over USD 3000, and one visit to the doctor can cost over USD 150, medical insurance really should be higher on an expat's priority list.
In some areas, such as Abu Dhabi, medical insurance is compulsory. Any employer hiring an expat must provide them with medical insurance; however there is no guarantee of the quality of the insurance plan. Although Abu Dhabi's solution sounds good in theory, there are problems with this system. Many insurance companies find it difficult to meet the standards that Abu Dhabi requires, and with the amount of competition driving prices down, it is hard for insurers to remain profitable. Recently, Green Crescent, an insurer with a long history in Abu Dhabi, announced that their shares fell 9.4%. They have already scheduled a shareholder's meeting to decide whether to dissolve the company or to operate on a reduced capital.
A common issue is that many expats do not know how to obtain medical insurance. Inexperience and unfamiliarity with a new market can make the process very confusing, but there are many channels of obtaining impartial advice available. Expat forums such as ExpatWomen can be a very valuable source, as can independent brokers such as UAE Medical Insurance. Advice tends to be free and the individual can be guided to the most suitable plan based on their unique situation and requirements.
In addition to medical insurance, house, contents, life and personal accident insurance are all other forms of insurance that should at least be considered to determine whether they are necessary to purchase. Insurance has always been the foundation of a sound financial plan and any adviser will suggest that one always arranges ones insurances prior to any investments. For a country where the expat has much more disposable income and with dangers such as the JLT fire serving as a very real wake up call as to how easily such problems can occur, obtaining insurance has never been so important.