Many Dubai retailers still waiting for insurance payments from April's rains, flooding

Dubai: Four months down the line, many Dubai retailers who faced business disruptions from April’s rains and subsequent flooding are yet to get their claims processed by their insurers. Some of these retailers had their claims rejected outright, but are trying to get insurers have another look at their submissions.

The situation with retailers affected by the April rains contrasts with the relatively smooth processing of claims and release of payments to residential property owners affected at the time. Homeowners and insurers have said that the payments were processed by first-half of June itself in a majority of such cases.

But when it comes to retailers, any progress made has been quite slow. While most retailers have opened the outlets impacted by water seepage, they say that the loss of revenue from the time these were shuttered are substantial. And that the longer the claims take to be approved, the more difficult it gets to regain lost ground on retailer cash flow.

This, according to a senior industry source, can be attributed to several factors. “A significant issue is the involvement of multiple parties - landlords who may also have filed claims for damages to the building itself in which the retailer outlet is,” said Avinash Babur, CEO of InsuranceMarket.ae.

“When both the property owner and tenant retailer submit claims, overlapping coverage issues can arise, necessitating careful evaluation.

“This has lead to delays as insurers work to determine the extent of the damage that falls under the landlord’s responsibility versus that of the retailer. Additionally, the complexity of settling commercial claims — often involving multiple types of coverage, such as property damage, business interruption, and liability — further contributes to the slower processing.”

More documents, steps involved

Insurance industry sources point to the more elaborate requirements for such claims. The submissions by the client – whether the property owner or retail – has to be meticulous, and the claim amounts verified independently by a loss adjustor.

Once the loss adjustor is appointed, they will need to conduct a full survey of the claim to determine its ‘payability and the extent or value of the claim to be approved’.

This thorough evaluation process, while necessary, can contribute to the delays in fund disbursement for retailer claims.

“In situations where there is a clear delineation of responsibilities between landlord and tenant, the claims process tends to be more streamlined,” said Babur. “Where the responsibility is shared or unclear, the claims process can become more complex and prolonged. Additional evaluations and negotiations may be required to determine the appropriate coverage and liability.”

Even then there is no guarantee that the claims will be approved. This is what the affected retailer dreads most. Because even if they re-submit or put the case up with the Central Bank of the UAE’s insurance sector ombudsman – who settles complaints brought by individuals against their insurer – the process can take longer.

What gets covered for retailers

Retailers are primarily compensated for damages to their property and stocked goods, store equipment and inventory. The building or any structural damage to it is typically covered under the landlord’s policy.

So, the retailer’s insurance generally focuses on the contents of the shop and any business interruption losses they might incur.