Financial shockwaves from earthquakes

I magine the shocked disbelief when you see your precious book collection thoroughly ransacked by an 'intruder', on returning home from a month long vacation.

Well, in the case of a family in Europe, the home contents that were ransacked included the silk wall paper, carpets and furniture in addition to the antique book collection; and the intruder was none other than that tiny energetic chatterer from the mammal world a squirrel.

Apparently, the animal fell down the chimney into a locked study and 'had some fun' until our home owner returned.

Incidents as described above, tinged with strange but unusual characteristics are not uncommon in this world, but in order to envision such possibilities, you need to be imaginative to the extent of 'thinking the unthinkable'. Some of such 'out of the world but real incidents' like the one authored by our squirrel, all of which resulted in damages or loss to home contents, were recently unveiled by Hiscox, one of the largest insurers of high value homes.

Accidents that affect homes and home contents do not necessarily happen when they remain unoccupied like when the owners are away. Misfortune can strike when they are very much home within the apparent safety of their four walls! A large number of home owners in the UAE, who had experienced the recent tremors minor though they may be will vouch for this.

Tragedy

Tremors were felt in different parts of the Emirates when an earthquake measuring 5.9 on the Richter scale rocked Qeshm Island off Iran, 115 km north of Ras Al Khaimah, last month.

Many of us watching the tragedy of natural calamities unfurl on our television screens have often sympathised with the unfortunate victims, but few would have bothered to imagine the financial consequences of a storm or earthquake on our lives. For most of us these accidents always 'happen to others.'

Residents in the GCC countries are risk takers of the highest order, especially when it comes to their own lives; the more you take risk individually, the lower your investment in insurance will be. Where as the life insurance density (per capita expenditure on life insurance) in Switzerland and the United Kingdom in 2004 was more than $3,000, according to Sigma a research publication from Swiss Re the density for the GCC countries was less than $80. For Saudi Arabia the life insurance density was an abominably low $2.10.

According to market estimates, more than 11,000 buyers have already moved to new homes in Dubai alone, since the market was opened to expatriate ownership in 2002. The number of buyers would be much higher, as more people are yet to move to the new houses. While the financiers of these houses may have covered the property under fire insurance, the contents of the home are constantly exposed to various risks, which need protection.

With so many iconic structures and world class residential developments either already under construction or fresh off the drawing board, right across UAE, Qatar and Bahrain, there is a mammoth opportunity for the insurance industry to penetrate the home insurance market.

Homeowners may do themselves enormous good if they buy a 'package home owners policy' easily available in the local market covering both damage to their property and their legal responsibility for any injuries and property damage they or members of their family cause to other people.

The writer is Deputy General Manager with Al Rajhi Company For Cooperative Insurance, Riyhad. Views expressed are his own and not necessarily subscribed to by his employers.