A new report released today by the Global Federation of Insurance Associations (GFIA) underscores the need for governments and the private sector to collaborate more closely to address threats posed to the well-being and economic prosperity of Canadians by natural catastrophes. GFIA, which represents over 40 insurance associations worldwide and is based in Brussels, Belgium, highlights a number of policy recommendations in this report, urging all orders of government to create environments where climate and cyber risks can be managed and mitigated.
“Today’s report is a global call to action for national and subnational governments to finally improve Canada’s preparedness for and resilience to severe weather and cyber events,” said Craig Stewart, Vice-President, Climate Change and Federal Issues, Insurance Bureau of Canada (IBC). “Prudent policy actions can ensure Canadian households and businesses are better informed about and protected against these threats. Specific to Canada, the soon-to-be-released federal budget includes an opportunity to address a major protection gap in this country by announcing a national public-private partnership that provides flood insurance to highly vulnerable Canadians. The policy work is complete. It’s now time for investment and implementation.”
Building on the approach taken in other industrialized nations, Canada’s insurers have provided the federal government with a proposal to create a national flood insurance program. This program would ensure Canadians living in areas at high risk of flooding would have access to the enhanced financial protection that insurance provides and allow for a quicker and more holistic recovery.
In addition, IBC is emphasizing GFIA’s recommendations to address the protection gap for cyber risk, including incentivizing and supporting the prevention of cyber attacks, conducting awareness campaigns, developing incident-reporting frameworks and fostering adaptation measures. GFIA estimates that there is a $900 billion cyber protection gap globally, with the economic impacts of cyber incidents being at least $1 trillion. The GFIA report used IBC’s Cyber Savvy campaign as an example of how public and private players can educate the public, especially small and medium-sized businesses, on cyber threats and the importance of cyber insurance.
In the natural catastrophe section of its report, GFIA recommends actions to address the protection gap – the difference between comprehensive financial protection and actual insurance coverage – for natural catastrophes by implementing prevention and adaptation measures, such as improved land-use planning and building codes, and incentives to relocate or rebuild away from high-risk areas.
As well, GFIA recommends that policy levers include government-backed insurance programs, public-private partnerships, mandatory contributions to natural disaster funds or pooling solutions to alleviate the financial burden on governments and speed up economic recovery from these events by, for instance, increasing take-up of insurance.
As announced by IBC earlier this year, insured damage caused by extreme weather and natural disasters surpassed $3.1 billion in 2022 – the third-worst year on record in Canada’s history. Average annual insured losses from natural catastrophes have grown 164% in the last decade – from $959 million between 2003 and 2012 to $2.53 billion between 2013 and 2022. In addition, the federal government’s budgeted payments to the provinces for recovery assistance after natural disasters has grown an alarming 466%, from $305 million in 2004–2005 to nearly $1.73 billion in 2023–2024.
About Global Federation of Insurance Associations
GFIA is a non-profit association established to represent national and regional insurance associations that serve the general interests of life, health, general insurance and reinsurance companies worldwide. Established in Washington, DC, in 2012, GFIA is composed of 40 member associations and represents the interests of insurers and reinsurers in 67 countries. These companies account for nearly 90% of total insurance premiums worldwide. GFIA is incorporated in Switzerland and its secretariat is based in Brussels.