Dubai floods third most costly disaster of 2024, says insurer

Reinsurer lost $150 million

Worse than Hurricane Helene

Infrastructure push

The financial hit from last year’s Dubai floods, when the heaviest rains in the UAE’s history submerged roads, homes and airports, made it the third most costly disaster in the world in 2024, one insurance company has announced.

Hannover Re, the world’s third-largest reinsurer, booked €138 million ($150 million) of losses from the April 2024 flooding, making it one of the company’s top five loss-events globally last year.

That figure exceeds its exposure to the US Baltimore bridge collapse (€103 million) in March last year and losses caused by Hurricane Helene (€116 million) in September, and ranks only behind Hurricane Milton (€230 million) in October and European floods in September (€194 million), the company said in its annual earnings report, released exactly a year after the floods.

The rare Gulf storm dumped more rain on Dubai in a single day than the city typically receives in a year. Neighbouring Oman was also affected.

The reinsurance broker Gallagher Re previously estimated that the Dubai floods caused $3 billion in combined insured property and vehicle losses, and more than $8.5 billion in total economic damage across the Gulf, though few insurers have disclosed company-specific losses tied to the event.

While Hannover Re said the losses from the Dubai floods remained within its catastrophe budget for 2024, the storm’s ranking alongside other major disasters underscores the rising cost of climate-related shocks in regions such as the Gulf that were once considered low-risk.

Reuters/Rula Rouhana

The UAE has since responded with some of the region’s biggest flood protection and prevention projects so far, after an urgent directive from Sheikh Mohamed bin Zayed Al Nahyan, president of the UAE and ruler of Abu Dhabi, in the days after the storm.

Just this week, Dubai awarded contracts worth AED1.4 billion ($381 million) for projects to expand the emirate’s stormwater drainage network, part of an AED30 billion upgrade aimed at increasing drainage capacity sevenfold. 

Dubai Municipality last week issued a request for proposals for the first two contracts of the AED80 billion Dubai strategic sewerage tunnels project, the city’s most extensive infrastructure overhaul to date.

These announcements came after the completion of the $2.5 billion deep tunnel storm water system in 2021, which now drains runoff from 40 percent of the city.

Stormwater network

Abu Dhabi has also issued tenders for upgrades to rainwater drainage and the construction of a stormwater network.

Hassam Chaudhry, associate professor for building services engineering at Heriot-Watt University Dubai, told AGBI that the infrastructure push was a step in the right direction, “especially as climate variability increases the frequency and intensity of extreme weather events”.

However, he said, beyond merely reactive solutions, “there is a growing need for long-term urban planning that incorporates climate adaptation, sustainable land use and community awareness”.

All the same, “While it’s difficult to eliminate risk from unprecedented weather completely,” Chaudhry said, Dubai “appears better positioned today to respond more effectively” to floods.

The April floods also reshaped the UAE’s insurance market. Property insurance rates jumped by as much as 15 percent in the final quarter of 2024 as insurers adjusted prices, the largest quarterly increase on record.

At the same time, UAE insurers accelerated payouts for flood claims, according to the insurance broker Marsh UAE. Gross insurance claims across all lines rose by a third in the first half of last year to AED19 billion, UAE Central Bank data showed.

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