Many of the 25 traders of Baniyas Market who lost millions of dirhams worth of stock and fittings when fire swept through the souq nearly a week ago are facing financial ruin because they did not have insurance. In a sense, this is not strictly correct: by failing to take out formal insurance policies for this kind of catastrophe, they were effectively self-insuring their stores.
As we reported yesterday, many of them have run businesses there for decades. Their wealth – and their families' prospects of a secure future when they eventually return to their countries of origin – was the stock they had built up over the years. As this unfortunate incident demonstrates, often the people who self-insure cannot really afford to do so. One of the business owners estimated the value of his lost stock at Dh400,000.
There has been a regular series of similar incidents. In May, a market at Masafi was devastated by fire, with losses estimated at Dh15 million. Many if not all of the traders were uninsured and, especially for those whose stock had been bought with loans, financial ruin loomed.
Relatively few people in the UAE take out property insurance compared to the average in western and developed Asian countries. One factor could be the very low rate of theft and other forms of crime, leaving only the low risk of fire as a cause of loss. The low cost of insurance reflects this but as the Baniyas Market incident shows, even unlikely scenarios sometimes occur.
It could be that the informal and sometimes ramshackle nature of these souqs creates a higher risk of fire and for that reason, insurers can be wary about underwriting businesses in them. That raises a separate question about whether fire authorities are ensuring these kinds of markets are safe, not just for those who work in them but for those who shop there. In terms of insurance, this actuarial risk can be addressed in the cost of the premium but the reality is that most of these traders chose not to take out formal insurance cover.
Some philanthropic individuals have helped these fire victims but it clearly isn’t the Government’s place to offer financial aid to those who choose not to protect their own financial status by buying insurance. Everyone ought to take responsibility for themselves – and especially if they cannot afford the alternative.