The unprecedented rainfall and flooding that impacted the Gulf in April 2024 represented a pivotal moment in the region's approach to natural catastrophe risk management. A year later, we assess the responses from the insurance industry and regional stakeholders to this significant event.
Key Takeaways
- A unique combination of atmospheric conditions developed over the Arabian Gulf from April 14 to 17, 2024. This resulted in rapid soil saturation and significantly increased runoff volumes.
- The floods prompted a notable shift in risk perception, with insured losses estimated by Guy Carpenter to be around USD 3 billion, which is considerably less than the overall economic losses.
- Prior to the event, insurance penetration rates were relatively low. In the year since, there has been a slight improvement, but the region remains significantly under-insured.
- The insurance and reinsurance sectors have recalibrated their strategies, strengthening catastrophe reserves and developing more sophisticated risk assessment and pricing models.
- Parametric solutions and public-private partnerships (PPPs) are anticipated to play a crucial role in the Gulf’s insurance landscape, especially in light of the increasing risks associated with climate change and extreme weather events.
One Year On: Reflections on the Gulf Floods of April 2024
When the flooding hit the Gulf last April, what factors contributed to making the event so uniquely devastating?
The floods of April 2024 were remarkable in both scale and effect, resulting from a convergence of multiple factors that led to this extraordinary disaster.
A unique combination of atmospheric conditions developed over the Arabian Gulf from April 14 to 17, 2024. The intensity of the rainfall was particularly striking, with the Khatm al-Shakla station near Al Ain recording 254.8 mm in a single day—approximately 75% of the area's estimated maximum precipitation. Some regions experienced rainfall equivalent to 2 years’ worth in just 24 hours.
The UAE’s National Centre of Meteorology cites a phenomenon known as the “pressure squeeze,” which occurs when a low-pressure system in the upper atmosphere interacts with surface low pressure. This effect, combined with warm ground temperatures and cooler air aloft, eventually creates severe thunderstorms. The UAE’s National Centre of Meteorology characterized this as a “historic weather event,” surpassing all records since 1949.
Despite the UAE’s modern infrastructure, it was not equipped to handle such extreme precipitation. The region’s typically dry climate meant that drainage systems were overwhelmed, leading to flash floods that disrupted critical infrastructure.Dubai International Airport experienced 3 days of operational loss, the E11 corridor was closed, and fatalities were recorded.
Furthermore, the timing and duration of the rainfall, occurring in 3 distinct downpour periods within 24 hours, resulted in rapid soil saturation and significantly increased runoff volumes beyond typical expectations for the region.
At the time of the event last year, insurance penetration rates were relatively low. In the last year, have you seen any change in the coverage gap as a result of the flooding?
Prior to the event, insurance penetration rates were relatively low. In the year since, there has been a slight improvement, but the region remains significantly under-insured.
The floods prompted a notable shift in risk perception across the Gulf, with insured losses estimated by Guy Carpenter to be between USD 2.9 billion and 3.4 billion, which is considerably less than the overall economic losses. The insurance sector recognized an opportunity to enhance community protection.
In the past year, there has been a marked increase in inquiries for natural catastrophe coverage, particularly in the UAE. Insurers have updated their products to reflect heightened risk awareness, with flood coverage becoming a more prominent topic in policy discussions.
Several free-zone authorities have mandated flood coverage for mortgages and commercial licenses, boosting uptake among small and medium enterprises (SMEs). While penetration is improving in motor and SME property, significant gaps remain in coverage for large infrastructure and municipal assets, leaving a persistent protection gap.
The insurance and reinsurance sectors have recalibrated their strategies, strengthening catastrophe reserves and developing more sophisticated risk assessment and pricing models. This has been accompanied by the introduction of new products tailored to emerging risks, offering more protection options for businesses and individuals.
Despite increased awareness, many residential and small business properties continue to be underinsured against flood risks. The primary growth in coverage has been observed in commercial and high-value residential markets, leaving a considerable portion of the population vulnerable.
Discussions among insurance regulators in the region regarding mandatory catastrophe coverage for specific property types have begun, though implementation has been slow and inconsistent. The UAE regulator’s integration of climate risks into financial risk management frameworks reflects this evolving approach.
Beyond increases in coverage, what other responses and solutions have been implemented in the region, particularly in areas of rebuilding and resilience?
Significant advancements in both physical and financial resilience measures have been observed over the past year.
From an infrastructure standpoint, cities across the UAE have made substantial investments in enhanced drainage systems and flood defences. Dubai and Abu Dhabi have expedited projects to upgrade urban drainage infrastructure, implementing advanced systems capable of managing more extreme precipitation events. Dubai has awarded AED 30 billion (approximately USD 8.2 billion) in contracts to triple storm-water capacity, including deep-tunnel outfalls and 7 new pumping stations; similar requests for proposals have been issued by Abu Dhabi and Sharjah.
The development of early warning systems has been prioritized. The UAE has improved its meteorological capabilities, enhancing rainfall monitoring networks and sophisticated forecasting systems to provide timely alerts and enable quicker responses to emerging flood threats.
Nature-based solutions are being piloted, including wadi-rejuvenation projects and wetland buffers along the east-coast plains to slow runoff and recharge aquifers.
From a policy perspective, more robust disaster risk reduction strategies guided by the Sendai Framework have been adopted. Urban planning and building codes are being revised to account for flood risks, particularly in areas near wadis and low-lying coastal zones, demonstrating a proactive approach to resilience planning.
A growing emphasis on cross-sector collaboration has emerged, with partnerships among insurers, government entities and climate scientists fostering integrated approaches to flood risk management. This holistic strategy combines physical resilience measures with financial protection mechanisms.
From a technical standpoint, Guy Carpenter has developed an in-house probabilistic flood model, utilizing advanced hydrological modeling techniques to simulate rainfall and runoff interactions with the landscape. These models enhance the accuracy of flood-behavior predictions by considering local topography and land-use changes, enabling insurers to assess flood risk more effectively.
How might parametric solutions or public-private partnerships increase insurance penetration in the region?
Parametric solutions and public-private partnerships (PPPs) are anticipated to play a crucial role in the Gulf’s insurance landscape, especially in light of the increasing risks associated with climate change and extreme weather events.
Parametric insurance products facilitate quicker payouts based on predefined parameters (e.g., rainfall levels, wind speeds), enabling faster recovery for policyholders following natural disasters. These solutions offer coverage for risks that are difficult to insure through traditional means, broadening the range of tailored insurance products available to businesses and individuals.
By pooling risks among multiple participants, parametric loss pools can distribute the financial impact of extreme weather events, making coverage more affordable and accessible, particularly for high-risk sectors such as agriculture and real estate. This approach encourages resilience investments, as businesses are more likely to enhance infrastructure knowing they will receive payouts based on specific weather conditions.
Index‑based triggers, rain‑gauge or radar‑based triggers pegged to 24‑hour totals (e.g., 100 mm) are being discussed for SME business‑interruption top‑ups.
Regulators in the UAE and Oman are scoping a GCC risk pool that would layer a government stop‑loss above industry retentions, funded partly by an aviation‑ticket levy and insurance-linked securities (ILS) placements.
Index covers for municipal assets (roads, schools) delivered via PPP concessionaires offer rapid liquidity, avoiding budgetary shocks and demonstrating state buy‑in—vital to closing ESG‑linked infrastructure financings.
Alternative risk transfer (ART) solutions, such as catastrophe bonds and ILS, attract alternative capital from investors seeking diversification, thereby enhancing the insurance market’s capacity to cover large-scale risks. These mechanisms enable businesses to transfer risks that are difficult to insure traditionally, providing greater flexibility in risk management.
The UAE government is fostering innovation in the insurance sector through supportive regulatory frameworks, encouraging the development and adoption of parametric and ART solutions, and positioning the UAE as a leader in insurance innovation. Advanced data analytics and modeling further enhance decision-making, allowing insurers to better assess risks and set appropriate payout parameters, improving overall efficiency in the insurance process.
What lessons has the reinsurance industry learned in the aftermath of the April floods?
The April 2024 floods have prompted significant reflection within the reinsurance industry, yielding several critical insights.
The Gulf is no longer considered “low-cat.” Pricing is now driven by forward-looking models rather than historical experience. Proprietary regional flood models (GCAT Flood, RMS® Flash Flood Gulf, etc.) are being integrated into quota-share and facultative placements.
Data has become a valuable asset. Carriers that provided detailed claims data to reinsurers achieved the best renewal outcomes; those with poor data faced higher retentions and stricter event definitions.
Risk-aware urban planning has become integral to the underwriting process. Regular dialogue among reinsurers, planners and civil works teams is now standard; drainage master plans and building codes are being reviewed alongside treaty wordings.
The event highlighted the limitations of existing models that failed to account for the risk of extreme precipitation in areas previously deemed “low-risk.” Reinsurers have responded by bolstering their catastrophe reserves and investing in more sophisticated risk assessment models tailored to the region's unique characteristics.
The industry has recognized that historical data alone is insufficient for pricing extreme events in a changing climate. Forward-looking climate science is increasingly incorporated into risk assessments, with a greater focus on climate change scenarios when evaluating long-term exposure.
The April 2024 floods served as a stark reminder that even regions historically considered less vulnerable to natural catastrophes must prepare for the unexpected in our changing climate.
One year on, the April 2024 floods have changed the Gulf risk landscape. Insurance penetration is inching upward, infrastructure resilience is surging, and innovative risk‑transfer mechanisms are finally getting real traction. Yet the protection gap remains wide—keeping actuaries, brokers and reinsurers on the front foot, as climate volatility reshapes this once “cat‑light” region.