Importance of property insurance emphasised at Cityscape 2008

"Insurance plays a key role in protecting what is typically an individual's largest single asset" explained Michael Walton, Director for General Insurance at Nexus. Homeowners need to realise the importance of purchasing appropriate insurance before opening the door to a new property."

Growth in the UAE's insurance market rose by 27% in 2006, according to figures from Moody's Investors Service earlier this year.

The rating agency announced total premiums volumes had reached $2.7bn (Dh10bn) in the UAE, while its nearest competitor, Saudi Arabia, achieved $1.6bn.

Many top mortgage lenders often require both a mortgage protection policy and building insurance as part of their mortgage package.

Walton observed that another contributing factor to the expansion of the non-life insurance sector was the demand for home and contents insurance followed closely by mortgage protection cover.

According to a recent report by BMI non-life insurance remains low compared to mature economies with a penetration rate of 1.3% of GDP.

According to financial advisors, exhibitions like Cityscape offer a platform to re-emphasise the importance of insurance in a region like the Middle East where there is too little awareness of the importance of home insurance.

The UAE's non life sector saw a dramatic growth over the past 18 months with premiums for property insurance rising from Dhs8.7bn in 2006 to Dhs11.9bn in 2007, accounting for as increase rate of 38% according to a report by The Insurance Authority (TIA).

In addition to homeowners insurance, property developers will require increasing levels of insurance cover to protect the major developments announced this week at Cityscape.

New projects announced this week are estimated to be in excess of $100bn.

"With the construction market growing apace, contractors increasingly understand the need to insure these projects against defect and delay.

There is a growing trend towards buying "Owner Controlled Insurance Programs" which are an effective way to improve the safety of construction operations and reduce the cost of insurance on large projects" said Walton.

"OCIPs will cover the owner, contractor and subcontractors and also may include design professionals. The coverage can include general liability (CGL), builder's risk, worker's compensation, design errors and omissions as well as excess, umbrella and other special coverages. Such comprehensive coverage is essential for developers undertaking mult-billion investments."

"It is a sure sign of a maturing market when dedicated trade exhibitions focus on educating people on better wealth and asset protection practices," concluded Walton.