Insurance firms want higher premiums on natural disasters

Insurance companies have embarked on re-pricing of insurance premium policies on natural disasters in the wake of earthquakes that hit Iran last week.
Some factories in specific areas are vulnerable to damage if such quakes occur in the future, according to local media reports.
Experts said some insurance companies are reluctant to offer coverage on natural disasters in certain areas due to their vulnerability to quakes and the proximity to a big fault line in the Red Sea.
Musa Al-Ruba’an, an insurance expert, said factories in the northern and western part of the Kingdom are exposed to quakes to a greater extent unlike the eastern region.
Earlier, natural disasters were covered at no charge. However, following heavy rains and floods that hit Riyadh a few years ago, insurance companies have started insisting on separate insurance coverage for natural disasters, expert said.
Mahir Al-Jia’iri, another expert, said natural disasters exist within the insurance companies’ covered items such as fire, lightning and other additional risks due to rains, floods and quakes.
But insurance premiums have changed in the aftermath of the disastrous Jeddah floods when some insurance companies expressed reservations over the geographical location of properties, he said.
Insurance premiums on properties were low earlier, but skyrocketed after the rains and floods in Jeddah and Tabuk. In some cases, premiums were raised more than 100 percent, he said.
Majid Sultan, a former insurance committee member at the Jeddah Chamber of Commerce and Industry, stressed the importance of coverage of natural disasters and the spread of insurance awareness, which will ease the burden on the government.
He proposed the creation of a database on regions most vulnerable to earthquake in a bid to determine appropriated insurance premiums on risks related to these regions.
Insurance on natural disasters represents 20 percent of total insurance premiums in the Kingdom and the figure is considered modest compared to damage that factories and vital business facilities would incur if disaster were to strike them, he said.