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Canadians need flood protection - It's time for the federal government to launch the National Flood Insurance Program

Canadians need flood protection

It's time for the federal government to launch the National Flood Insurance Program

Flooding is Canada’s greatest climate threat. By launching the National Flood Insurance Program, the federal government can help protect the 1.5 million households at high risk on a cost neutral basis.

About 10% of all Canadian households across the country are highly exposed to flooding but lack access to flood insurance. As we saw in central Canada in 2017 and 2019, southern British Columbia in 2021, Newfoundland and Labrador in 2022 and Nova Scotia in 2023, the financial and emotional consequences for those in harm’s way are dire.

Canadians need affordable flood insurance to protect those at risk while reducing the financial burden on taxpayers even as the impacts of climate change grow.

A National Flood Insurance Program, delivered through a partnership between the federal government and the property and casualty (P&C) insurance industry, can provide financial protection for Canadians, while reducing disaster costs to federal and provincial government treasuries. Most other G7 countries, like the U.K., U.S., and France already have such programs in place.

Our federal government, to its credit, recognizes that a public-private solution is needed – as evidenced in its Task Force on Flood Insurance and Relocation report. In 2023, Finance Canada committed seed funding to set up Canada’s first National Flood Insurance Program to help protect homes that are at the highest risk of flooding. However, the program requires operational funding – not just a pledge or commitment.

Canada’s P&C insurance industry has been working continuously with federal and provincial emergency management officials and national experts for over six years to develop a solution needed to address the country’s greatest climate threat. Now the solution is ready and Canada’s P&C insurers are ready to set up, scale and deliver a cost-neutral program for affordable flood insurance. The program’s implementation is the single most important step Canada can take to better protect homeowners from the financial risks of climate change today.

Canadians should not wait any longer – the federal government must fund the National Flood Insurance Program.

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How do we protect people who live in high-risk flood zones where insurance is not accessible?

By funding and implementing a National Flood Insurance Program, which the federal government committed to in Budget 2023. Funding the program proactively, rather than responding in the aftermath of catastrophes with disaster financial assistance, is a more cost-effective approach that avoids the financial and emotional toll on Canadians when disaster strikes.

A partnership between P&C insurers and the federal government will help protect Canadians financially from flooding.

Insurers are ready to deliver the program – it just needs government funding to get it up and running. Once launched, the program should run on a cost-neutral basis.

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How does the flood program work?

Through a public-private partnership, all Canadians can be protected from flood risk for little or no additional cost to governments, as homeowners at risk will pay for predictable and comprehensive coverage rather than receiving bailouts through taxpayer-funded disaster financial assistance programs.

All Canadians, no matter where they live, will have access to overland flood insurance through their existing home insurance policy. The new high-risk product will be offered by the same brokers or agents that homeowners work with today. The process will be seamless.

No administrative burden for government.

The flood insurance product is ready, and Canada’s P&C insurance industry is prepared to work in partnership with the federal government to rapidly scale and deliver the program. P&C insurers are offering to handle all product distribution and claims administration on a cost recovery basis.

IBC estimates that the program can be administered at low cost by a small team (less than 50 people) within a federal agency such as the Canada Mortgage and Housing Corporation. By reallocating savings from the residential portion of existing disaster financial assistance, the program is expected to be cost-neutral for provincial and federal governments.

Affordable, customizable options available for Canadians

Customers will have the option to adjust their deductibles and coverage to suit their needs and budget.

All Canadians deserve flood protection

Extreme flooding can have a devastating effect on communities. As the risk of flooding increases across the country, more and more Canadians are at high risk and either cannot access or are unable to afford flood insurance for their homes.