Mekunu takeaway: Why insurance coverage is imperative

Low insurance penetration in Dhofar Governorate, parts of which were devastated by Cyclone Mekunu during its destructive sweep of the region over the past weekend, means that significant numbers of uninsured property and farm owners are unlikely to receive compensation for damage to their holdings, say market experts.
With the exception of industries, factories, hotels and resorts, and well-established commercial businesses operating in the governorate, few other holdings — whether residential homes or small farm — are covered, the Observer has learnt. The low uptake of insurance coverage in the governorate, particularly among home and farm owners, is partly attributable to cultural reasons, it is pointed out.
Insurance firms estimate that several hundred waterfront properties such as hotels and resorts, besides factories, commercial businesses, farm holdings and other establishments, suffered varying degrees of physical damage as a result of gusting winds, surging waves and flash floods in the wake of Cyclone Mekunu.
Compensation claims that have since begun to trickle in are from those that have suffered relatively minor damage. The bigger claims — primarily from large hotels, resorts, industries and other commercial establishments that suffered significant losses — are expected to begin flowing in once a full assessment of the damage is completed.
The big question for many insured businesses is whether their policies provide comprehensive coverage against storm-related damage to all parts of their properties.
“Many business owners tend to have only their main buildings fully covered, but fail to secure suitable coverage for their outdoor assets that are exposed to the elements,” a market veteran explained. “Consequently, outdoor components, such as the boundary wall, main gate, car park, landscaped areas and other fixtures, tend to get omitted from the coverage. Sometimes, sub-limits may be applied to such components, leaving them out of the scope of any claim when disaster strikes.”
Insurance penetration is particularly disappointing in the small-scale farm sector in Dhofar Governorate where scores of farms were destroyed during the storm. Despite the introduction — last October — of insurance products for crops, agriculture produce and livestock breeding, uptake has been limited, say market observers.
However, thanks to government action in suitably prepping the local population well ahead of the cyclone, damage to private property was significantly minimised, an executive stressed.
“As a result of robust government warnings, I think the people were well prepared this time, and took all precautions to limit damage to their holdings. Businesses, for example, were advised to suspend operations for the duration of the storm, vehicles were shifted to higher ground, and so on — measures that helped limit losses.”