Fire & Property All Risk - Premium Calculation¶

Pricing Methods¶

Method 1: Simplified Pricing (Current Business Practice)¶

For Residential Villas:

Sum Insured	Premium (incl. VAT)
Below AED 2,000,000	Minimum AED 900
Above AED 2,000,000	Underwriter referral required

Application: - Quick pricing for standard residential properties - Fixed minimum premium for villas and apartments - Above AED 2M threshold = custom underwriting assessment

Above Threshold Requirements: - Detailed property inspection - Valuation report for high-value properties - Fire protection documentation - Custom rating factors applied

Method 2: Detailed Rating Method¶

For all property types, Premia uses complex rating factors based on multiple variables.

Rating Factors¶

Base Rate¶

Base premium calculated as:

Base Premium = Sum Insured × Base Rate × Adjustment Factors

Base Rate by Occupancy:

Occupancy Type	Base Rate Range
Residential	0.10% - 0.20%
Commercial Office	0.15% - 0.25%
Retail	0.20% - 0.35%
Industrial	0.25% - 0.50%
Warehouse	0.15% - 0.30%

Minimum Premiums: - Product 1010 (Fire): AED 900 - Product 1030 (PAR): AED 1,200

Construction Type Factor¶

Construction Type	Factor
Type 1 - Fire Resistive (RCC)	0.80
Type 2 - Non-Combustible (Steel)	0.90
Type 3 - Ordinary (Brick/Block)	1.00
Type 4 - Heavy Timber	1.10
Type 5 - Wood Frame	1.30

Fire Protection Factor¶

Fire Protection	Factor
Automatic sprinklers + alarm	0.70
Sprinklers only	0.80
Fire alarm + extinguishers	0.90
Extinguishers only	1.00
No protection	1.20

Building Age Factor¶

Building Age	Factor
New (0-5 years)	0.90
Modern (6-15 years)	1.00
Older (16-30 years)	1.10
Old (31-50 years)	1.25
Very old (50+ years)	1.50

Occupancy Risk Factor¶

Occupancy	Risk Level	Factor
Owner-occupied residential	Low	1.00
Tenant-occupied residential	Medium	1.10
Office use	Low-Medium	1.05
Retail/Restaurant	Medium	1.15
Warehouse (general)	Medium	1.10
Warehouse (hazardous)	High	1.40
Industrial (light)	Medium	1.20
Industrial (heavy)	High	1.50

Location Factor¶

Location Type	Factor
Urban - near fire station (<2 km)	1.00
Urban - far from fire station (2-5 km)	1.10
Suburban (5-10 km)	1.20
Remote (>10 km)	1.40

Discounts & Loadings¶

Available Discounts¶

Discount Type	Percentage
No claims (5 years)	10%
Multiple properties	10%
Enhanced security	5%
Advance payment	3%
Large sum insured (>AED 10M)	5%

Maximum Total Discount: 20%

Risk Loadings¶

Loading Type	Percentage
Poor claims history	25%
High-risk hazards present	30%
Vacant property	50%
Substandard construction	20%
No fire protection	15%

Maximum Total Loading: 75%

Additional Perils¶

Earthquake Coverage¶

Zone	Risk Level	Additional Rate
Zone 1	Low seismic	+0.05%
Zone 2	Moderate seismic	+0.10%
Zone 3	High seismic	+0.15%

Flood Coverage¶

Flood Risk	Additional Rate
Low risk (>5m elevation)	+0.05%
Medium risk (2-5m)	+0.10%
High risk (<2m or near water)	+0.20%

Theft Coverage (PAR Only)¶

Security Level	Additional Rate
Excellent (CCTV + guards + alarms)	+0.02%
Good (CCTV + alarms)	+0.03%
Basic (alarms only)	+0.05%

Property All Risk Premium¶

PAR Base Loading¶

Property All Risk policies include broader coverage: - Base premium = Fire premium × 1.20 - Includes theft and accidental damage - Higher minimum premium (AED 1,200)

Optional Extensions¶

Coverage Add-Ons and Rates¶

Extension	Rate/Basis	Notes
Debris Removal	Included	Up to 10% of claim
Professional Fees	Included	Up to 5% of sum insured
Loss of Rent	5% of premium	On annual rent value
Alternative Accommodation	5% of premium	For residential only
Public Authorities	10% of premium	Compliance with regulations
Terrorism	0.10% of SI	On sum insured

How Add-Ons Are Priced¶

Loss of Rent:

Loss of Rent Premium = Base Premium × 5%

Terrorism Coverage:

Terrorism Premium = Sum Insured × 0.10%

Public Authorities:

Public Authorities Premium = Base Premium × 10%

Business Interruption Premium¶

For Products 1020/1040¶

Basis: Annual gross profit or turnover

Rate Range: 0.50% - 2.00% of gross profit

Indemnity Period Factor:

Indemnity Period	Factor
12 months	1.00
24 months	1.60
36 months	2.00

Calculation:

BI Premium = Gross Profit × Rate × Indemnity Period Factor

Premium Components¶

What's Included in Base Premium¶

Material damage coverage
Selected perils (Fire) or all risks (PAR)
Debris removal (up to 10%)
Professional fees (up to 5%)
Policy fees
VAT (5%)

Optional Add-Ons (Extra Cost)¶

Loss of rent
Alternative accommodation
Public authorities compliance
Terrorism coverage
Business interruption
Increased debris removal limits

Calculation Examples¶

Example 1: Small Villa (Standard Rate)¶

Sum Insured: AED 1,500,000
Property Type: Residential villa
Premium: AED 900 (minimum with VAT)

Example 2: Commercial Building¶

Sum Insured: AED 5,000,000
Property Type: Commercial office
Construction: RCC (Type 1)
Building Age: 8 years
Fire Protection: Sprinklers + alarm
Location: Urban (1 km to fire station)
No claims history

Calculation: - Base Rate: 0.20% (commercial office) - Base Premium: AED 5,000,000 × 0.20% = AED 10,000 - Construction: × 0.80 = AED 8,000 - Fire Protection: × 0.70 = AED 5,600 - Building Age: × 1.00 = AED 5,600 - Location: × 1.00 = AED 5,600 - No claims discount: -10% = AED 5,040 - Premium (excl. VAT): AED 5,040 - Premium (incl. VAT): AED 5,292

Example 3: Industrial Warehouse¶

Sum Insured: AED 20,000,000
Property Type: Industrial warehouse
Construction: Steel frame (Type 2)
Building Age: 12 years
Fire Protection: Alarm + extinguishers
Location: Suburban (7 km to fire station)
Claims in last 2 years

Calculation: - Base Rate: 0.30% (warehouse) - Base Premium: AED 20,000,000 × 0.30% = AED 60,000 - Construction: × 0.90 = AED 54,000 - Fire Protection: × 0.90 = AED 48,600 - Building Age: × 1.00 = AED 48,600 - Location: × 1.20 = AED 58,320 - Claims loading: +25% = AED 72,900 - Premium (excl. VAT): AED 72,900 - Premium (incl. VAT): AED 76,545

Example 4: Property All Risk (Villa)¶

Sum Insured: AED 3,000,000
Property Type: Residential villa
Construction: RCC
Building Age: 3 years
Fire Protection: Sprinklers + alarm
Security: CCTV + guards + alarms

Calculation: - Fire Base Rate: 0.15% - Fire Premium: AED 3,000,000 × 0.15% = AED 4,500 - Construction: × 0.80 = AED 3,600 - Fire Protection: × 0.70 = AED 2,520 - Building Age: × 0.90 = AED 2,268 - PAR Loading: × 1.20 = AED 2,722 - Theft Coverage: +0.02% = AED 600 - Enhanced security discount: -5% = AED 2,586 - Premium (excl. VAT): AED 3,186 - Premium (incl. VAT): AED 3,345

Underwriter Referral¶

When Custom Assessment Required¶

Sum insured above AED 2M (residential)
High-risk occupancies
Poor construction type
Properties without fire protection
Adverse claims history
Special hazards present
Very old buildings (50+ years)

Assessment Process¶

Review complete property documentation and photos
Apply rating factors
Assess special conditions and hazards
May require property inspection
Determine final rate and premium
Approve or decline

Next Steps¶

Quote Requirements - Documents needed
Endorsements - Mid-term changes
Commission - Broker compensation