LONDON: The cost of insuring high rises in Dubai is expected to rise following a number of building fires in the emirate, including the Torch Tower in the Marina area, which caught alight in August for the second time in two years.
Any potential rise in premiums will be partly driven by increased demand for insurance as awareness grows of how at risk some of Dubai’s apartment blocks are to fire outbreaks, according to insurance market experts.
Many tall buildings in the emirate still have inadequate fire safety standards, with some still clad with poor-quality material that allows blazes to spread quickly, they said.
“The fire incidents have continued to occur, as the core problem of flammable cladding has unfortunately not been solved,” said Michael Kortbawi, partner at the Dubai-based law firm, BSA Ahmad Bin Hezeem & Associates.
“This has created awareness with building owners and owners’ associations about the need to carry proper levels of insurance coverage, and has thus led to an increase in demand for cover for high-rise cladded buildings.
“Underwriters have also taken note of the increased risk and have accounted for this in setting their rates. Therefore, rate increases can be expected.”
In 2013, the UAE revised its building safety code, which required cladding on all new buildings over 15 meters to be fire-resistant. Older buildings are exempt from the ruling.
The lack of adequate fire safety standards in high-rise towers is not just a Dubai problem.
In the UK a fire broke out in Grenfell Tower, West London, in June, claiming the lives of at least 80 people.
It is suspected that the blaze was able to spread quickly because of the type of cladding used on the building. Rates will inevitably be higher for those buildings in Dubai that do not meet required safety standards, said Anthony Cerchiai, head of general insurance at Nexus insurance brokers.
“Where a building is sub-standard, such as through the use of dangerous cladding, the insurer might totally refuse to take up the risk, leaving the homeowner or resident exposed and uninsured. In those cases, we advise people to talk to an expert in risk insurance,” he said.
Insurers are likely to be increasingly wary about insuring buildings, according to Tim Davies, deputy CEO at insurance broker Marsh UAE. “In relation to tall towers, we are seeing stricter underwriting criteria and more scrutiny is being applied,” he said.
However, Michael Rafter, CEO at the underwriter Arma Group, tempered expectations of significant price rises, saying premiums had already began to rise last year.
“During 2016 the market had experienced an increase in the property insurance rates, particularly in respect of high-rise buildings, especially those with cladded exteriors,” he said, adding that this momentum subsided during the second quarter of this year.
“The current fire losses will certainly make more insurers hesitant about decreasing premiums, but we don’t see these current losses as events that push the insurance markets up significantly from the increases already achieved during 2016,” he said.
Instead, Rafter sees insurers placing greater emphasis on their clients implementing risk management and loss-prevention measures.
While premiums for high rises are likely to start edging upwards, the wider insurance market in the UAE remains relatively soft owing to a competitive and overcrowded market, Kortbawi said.
“This leads to a price war, which has affected the premium value on all levels. Until consolidation takes hold or market penetration rates increase, continued price weakness in at least some lines can be expected,” he said.
Insurance hike expected for Dubai high-rises after fires
Insurance hike expected for Dubai high-rises after fires
‘The future is renewables,’ Indian energy minister tells World Economic Forum
- ‘In India, I can very confidently say, affordability (of renewables) is better than fossil fuel energy,’ says Pralhad Venkatesh Joshi during panel discussion
- Renewables are an increasingly important part of the energy mix and the technology is evolving rapidly, another expert says at session titled ‘Unstoppable March of Renewables?’
BEIRUT: “The future is renewables,” India’s minister of new and renewable energy told the World Economic Forum in Davos on Wednesday.
“In India, I can very confidently say, affordability (of renewables) is better than fossil fuel energy,” Pralhad Venkatesh Joshi said during a panel discussion titled “Unstoppable March of Renewables?”
The cost of solar power has has fallen steeply in recent years compared with fossil fuels, Joshi said, adding: “The unstoppable march of renewables is perfectly right, and the future is renewables.”
Indian authorities have launched a major initiative to install rooftop solar panels on 10 million homes, he said. As a result, people are not only saving money on their electricity bills, “they are also selling (electricity) and earning money.”
He said that this represents a “success story” in India in terms of affordability and “that is what we planned.”
He acknowledged that more work needs to be done to improve reliability and consistency of supplies, and plans were being made to address this, including improved storage.
The other panelists in the discussion, which was moderated by Godfrey Mutizwa, the chief editor of CNBC Africa, included Marco Arcelli, CEO of ACWA Power; Catherine MacGregor, CEO of electricity company ENGIE Group; and Pan Jian, co-chair of lithium-ion battery manufacturer Contemporary Amperex Technology.
Asked by the moderator whether she believes “renewables are unstoppable,” MacGregor said: “Yes. I think some of the numbers that we are now facing are just proof points in terms of their magnitude.
“In 2024, I think it was 600 gigawatts that were installed across the globe … in Europe, close to 50 percent of the energy was produced from renewables in 2024. That has tripled since 2004.”
Renewables are an increasingly important and prominent part of the energy mix, she added, and the technology is evolving rapidly.
“It’s not small projects; it’s the magnitude of projects that strikes me the most, the scale-up that we are able to deliver,” MacGregor said.
“We are just starting construction in the UAE, for example. In terms of solar size it’s 1.5 gigawatts, just pure solar technology. So when I see in the Middle East a round-the-clock project with just solar and battery, it’s coming within reach.
“The technology advance, the cost, the competitiveness, the size, the R&D, the technology behind it and the pace is very impressive, which makes me, indeed, really say (renewables) is real. It plays a key role in, obviously, the energy demand that we see growing in most of the countries.
“You know, we talk a lot about energy transition, but for a lot of regions now it is more about energy additions. And renewables are indeed the fastest to come to market, and also in terms of scale are really impressive.”
Mutizwa asked Pan: “Are we there yet, in terms of beginning to declare mission accomplished? Are renewables here to stay?”
“I think we are on the road but (its is) very promising,” Pan replied. There is “great potential for future growth,” he added, and “the technology is ready, despite the fact that there are still a lot of challenges to overcome … it is all engineering questions. And from our perspective, we have been putting in a lot of resources and we are confident all these engineering challenges will be tackled along the way.”
Responding to the same question, Arcelli said: “Yes, I think we are beyond there on power, but on other sectors we are way behind … I would argue today that the technology you install by default is renewables.
“Is it a universal truth nowadays that renewables are the cheapest?” asked Mutizwa.
“It’s the cheapest everywhere,” Arcelli said.
