$332m insurance loss reported for Address Hotel, Dubai fire

The fire that ripped through the Address Hotel in Dubai on New Year’s Eve of 2015 is expected to result in an insurance claim of just over $332 million, according to the property developer.

Emaar Properties, which also developed the world’s tallest building the Burj Khalifa said in a stock market filing that it expects to recover 1.22 billion dirham from its insurer Orient Insurance.

The Address Downtown hotel, which is 63 stories and one of the highest skyscraper hotels in Dubai, caught fire on the 31st December 2015. The fire ripped through the building, with the outer cladding said to have helped to fuel the rapid damage that night.

The hotel has remained closed since the fire and the insurance loss had originally been estimated at between US$200m and US$300m. Now it transpires that the loss is higher, which could result on some reinsurance capital being called on to support the payout.

As we wrote recently, reinsurance companies have tightened terms and conditions, as well as increase their commission rates, on residential and commercial property risks in the Gulf and Middle East region in the wake of a number of fires in high-rise buildings.

That trend is likely to continue now that the claim has increased in size, with reinsurers certain to ask questions to property insurers in the region about what they know regarding property developers practices and the materials used in such high-value skyscrapers..