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EDITOR IN CHIEF- ABDULLAH BIN SALIM AL SHUEILI

Oman insurers brace for flood of Cyclone Mekunu-linked claims

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MUSCAT, MAY 27 - Insurance firms are gearing up for a tide of compensation claims arising from the devastation caused by Cyclone Mekunu to businesses and properties in Dhofar Governorate over the weekend. A quick survey of insurers contacted by the Observer reveals that claim intimations have begun to trickle in mainly from private companies impacted by the storm. This is anticipated to burgeon into a torrent as insured businesses and property owners begin assessing the magnitude of damage caused to their holdings, operations and infrastructure.


Eager to ensure that affected companies and homeowners get their claims settled equitably and expeditiously, the Capital Market Authority (CMA), which regulates the insurance sector, convened a meeting of high-level executives representing insurers and brokers with a presence in Dhofar Governorate. Shaikh Abdullah bin al Salmi, Executive President, CMA, presided over the meeting, joined by senior colleagues from the Authority.


In a post tweeted by the Authority, officials said the meeting was in line with nationwide efforts that saw a wide variety of ministries and government agencies making common cause in mitigating the effects of Cyclone Mekunu on local investments, as well as the general population in Dhofar Governorate.


At the meeting, which was held in Muscat, officials appealed to insurance firms to allocate the requisite administrative and human resources necessary to process the large number of claims expected to be generated in Mekunu’s wake. They also stressed the need for more authority to be delegated to their branch offices in Dhofar Governorate to help with the speedy processing and disposal of compensation claims.


A number of Dhofar-based companies listed on the Muscat Securities Market (MSM) have also posted details of damage to plant infrastructure and disruption to services in the wake of the storm. The list includes Sembcorp Salalah Power and Water Company, which operates a Independent Water & Power Project in Mirbat. While the plant continues to generate electricity, water desalination operations have been suspended on account of turbulent conditions offshore, it said.


Likewise, Raysut Cement Co, the nation’s largest cement producer, said it was suspending operations for up to 10 days to address waterlogging in parts of the complex in Raysut Industrial Estate. The Observer has learnt that a number of oceanfront tourism and hospitality properties have suffered varying degrees of damage as Mekunu barrelled into Dhofar Governorate on Friday night. Compensation claims will likely accrue on damage caused to outdoor assets and fixtures, such as swimming pools, gardens, landscaping, gazebos, car parks, boundary walls, and so on.


Much of the damage wrought by Mekunu — a monstrous Category 3 storm with gale force winds — was borne by public infrastructure, such as road networks, drainage systems, gardens and roadside landscaping – assets that are typically uninsured. Repairing and restoring this infrastructure will inevitably come at a cost to local municipal and government authorities, according to experts.


Also worrisome is the generally low penetration of insurance coverage in Dhofar Governorate, particularly in the agriculture and farm sector, it is pointed out. An insurance executive explained: “Although the CMA approved a number of insurance products for farmers and agriculture based businesses, the uptake has been disappointingly low, particularly in Dhofar Governorate. Consequently, it’s likely that many of the orchards and farms in Dahariz and elsewhere, that suffered significant damage over the weekend, are unlikely to secure any compensation.”


Indeed, in the lead-up to Mekunu’s arrival on Dhofar’s shores, insurance firms were bombarded with inquiries from Dhofar based businesses and property owners seeking last-minute coverage for their holdings – appeals that were firmly declined given the lateness of these requests, to an insurance official. “No insurer provides coverage when an extreme weather event is imminent — its folly,” he commented.


A fuller picture of the damage caused by Mekunu and the compensation claims arising thereof is anticipated in the coming days, according to an industry expert. “It’s too early to provide an estimate of the economic losses or compensation claims that insurers or reinsurers will have to shoulder. Right now, businesses, organisations and property owners are attending to more pressing matters — picking up the pieces and restoring a sense of normality in their daily lives. Raising a claim will happen next.”


Conrad Prabhu


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