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The floods in Dubai seemed unusual. But the climate emergency could make the weather more unstable elsewhere. Insurance, disaster preparedness and recovery costs are expected to rise.
— Jesse Chase-Lubitz
Dubai, one of the world's driest regions, has been hit by heavy rain and strong winds for the second time this week. It comes just two weeks after the desert metropolis was covered in a year's worth of rain in 12 hours.
Reinsurance broker Guy Carpenter has estimated that extreme weather in Dubai could result in insured losses of up to $850 million across infrastructure, roads, buildings, vehicles and utilities.
Extreme weather events are one of many events that have drawn attention to climate insurance, and experts expect insurance prices to rise. From airports to tours, hospitality and destination management, unanticipated climate change can have a huge impact on the travel industry.
heavy rain in the desert
From April 14th to 17th, flooding crippled Dubai. The city's airport, the world's second-busiest, was closed, with hundreds of flights canceled and people and cars stranded. Twenty-one people were killed in Dubai and neighboring Oman.
Over the next three days, Emirates diverted dozens of flights and canceled nearly 400.
“We know our response is far from perfect,” Emirates CEO Tim Clark said in a statement.
Some early reports suggested that a technology funded by the United Arab Emirates called “cloud seeding” was to blame for the flooding. This involves small jets flying into rain clouds and spraying them with a sodium mixture meant to enlarge the water droplets and encourage more rain.
The technology works to occasionally bring sudden buckets of rain to some parts of the UAE.
But experts said cloud seeding would be too small to cause the kind of heavy rains Dubai endured. Rather, climate change is most likely to blame. And it will almost certainly happen again.
Abnormal weather around the world
Despite the shocking nature of the events in Dubai, they are actually not unprecedented. In 2022, flash floods destroyed homes and infrastructure in the UAE, forcing more than 3,800 people to evacuate. According to World Weather Attribution, 85% of UAE residents live in flood-prone areas.
Other effects of global warming, such as rising temperatures, are also creating consistent financial and operational liabilities for travel companies.
In 2023, 25,000 tourists were forced to evacuate Rhodes due to a wildfire that lasted six days. EasyJet and TUI operated repatriation flights, and Greece launched “free” holidays for those forced to evacuate.
The summer sun is getting hotter and hotter, and some travel companies are already making it impossible to plan active trips such as cycling holidays in southern Europe.
“It's just too hot,” said Shannon Stowell, CEO of the Adventure Travel Trade Association.
Stowell said he knows of several Italian and Spanish travel companies that are looking to move active travel to northern destinations such as Scandinavia.
Other countries are also struggling as ski seasons are shortened or canceled due to rising temperatures. Wildlife movements are also changing, with sharks now visiting areas they have never seen before.
He said: “Travel operators will be forced to consider how a shortened season and increased logistics costs will impact their business, and will need to consider alternative ways to generate revenue.” .
Rising costs of climate change
As experts predict rising prices, the frequency and intensity of extreme weather events is increasing, and the issue of climate insurance is gaining attention.
“Insurance companies are unlikely to forget this.” [these floods] soon,” said Sami Doyle, CEO and co-founder of TMU Management, a travel-focused insurance brokerage.
“At this early stage, it will be difficult to say how much of an increase we can expect,” Doyle said. “But certainly, talking about Dubai won't bring it down. It could easily increase to the point where you have to think twice when setting future sales prices. Certainly, you should expect a noticeable increase.”
While some companies are considering ways to reduce their exposure to natural disasters, few appear to be actively investing in climate insurance.
“Some large companies have been hit pretty hard,” said Neil Gunn, head of flood and water management research at the WTW Research Network. He added that several companies are taking measures. “We expect more to come, especially with recent incidents.”
However, many companies are not progressing or are in the very early stages of developing resilience and insurance.
TUI told Skift that it had not taken any special measures in response to the recent flooding.
“Developing the resilience of our services is an ongoing process,” a TUI spokesperson said, adding that it had carried out a company-wide risk analysis of TUI's global infrastructure. The analysis said, “The analysis found that the risk of airport disruption was low in terms of physical risk.''
The story of “climate resilience”
Experience-based companies say insurance and resiliency are not of interest to them because the industry has built-in flexibility.
“Most tours and attractions are booked within two to three days of the activity taking place, so…our industry tends to be less affected by these disruptions than others. There is also less need for climate insurance,” said CEO and founder Craig Everett. Holibob is a company that provides tour and experience technology to online travel retailers and tourism boards.
GetYourGuide said climate insurance is not something it is currently pursuing.
But some experts say preparedness still needs to be considered.
“With the frequency of extreme weather events increasing and the risks posed by climate change increasing, it is critical for operators to have contingency plans in place,” said Co-Founder and Chief Executive Officer of Arival, a travel events and research company. Douglas Quimby, CEO, said:
what happens next
Mr Doyle said insurance increases should be factored into future costs and pricing, and businesses should consider safety within the destination.
“Ask yourself: Am I overexposed in this destination or any other destination?” Doyle said.
WTW's Gunn said there are several steps businesses can take to reduce the risk of flooding, including developing flood emergency plans that include evacuation routes and procedures for shutting off utilities to protect equipment. It is said that it is necessary to formulate a plan. He can also install backup generators and ensure that flood damage and business interruption are adequately covered by insurance.
“Floods and climate change will inevitably be considered more than ever in the Middle East,” Gan says. “While it is too early to predict the long-term impact on prices, we expect terms and conditions, particularly deductibles for perils such as water damage and flooding, to be reviewed with further scrutiny in the coming years.”
Photo credit: Aerial view of Dubai.Credit: Christoph Schulz
