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Opinion: It's time to invest in a national flood insurance program

Jun 5, 2023 | By: Celyeste Power, President and CEO, IBC
Opinion: It's time to invest in a national flood insurance program Insights Article Image

Canada is becoming a riskier and more dangerous place to live. That's not an opinion – it's a fact.

Severe weather events in 2022 caused approximately $3.1 billion in insured losses, one of the highest annual totals on record. Disasters affected almost every part of Canada, disrupting thousands of lives: Hurricane Fiona in Atlantic Canada, the springtime derecho in Ontario and Quebec, severe summer thunderstorms across the Prairies and, right at the end of the year, a bruising winter bomb cyclone in the East and a king tide in British Columbia.

The trend has been clear for years: More and bigger floods, wildfires, hailstorms, windstorms and extreme heat events – all influenced by our changing climate – are costing billions and putting more lives at risk.

As Canada focuses on long-term policy actions to address the causes of climate change, we are moving too slowly to take immediate defensive actions that could better protect Canadians, their families and their property.

As a hockey coach might put it, Canada needs to work hard at both ends of the rink. That means not only going on the offence to cut emissions and combat climate change, but also playing strong defence by acting now to make our communities more resilient against disasters.

Only timely and sustained action on the part of governments, industry and indeed the whole of society, can create a culture of preparedness and help protect the health, homes and quality of life of all Canadians.

What exactly can governments do?

First, the federal government should make climate resilience a priority in its upcoming Budget by including the funding needed to set up a national high-risk flood insurance program.

Insurers have been working with federal and provincial governments for over five years to design the partnership needed to address Canada's greatest natural catastrophe risk head-on. This national flood program would help speed up recovery and rebuilding for displaced families and businesses in flooded communities. It would also reduce unplanned disaster costs facing the federal government.

Canada needs decisive action to reduce damage and risk by better understanding where and how to build, rebuild or relocate. At the same time, Canadians need affordable flood insurance to protect those at risk while reducing the financial burden on taxpayers. Most G7 countries already have such a program in place.

Canada's insurers are ready to partner with federal and provincial governments to set up a program for affordable flood insurance. Its implementation is the single most important step Canada can take to better prepare for the impacts of climate change.

Without such a partnership, Canadians, who are already reeling from cost-of-living pressures, will be increasingly challenged to find affordable insurance solutions. This will be particularly true in regions of the country that are highly exposed to flooding such as British Columbia, Alberta and the Atlantic Provinces.

Second, the federal government can lead the way this spring by finalizing – and funding – a National Adaptation Strategy. It's an initiative that the government itself has touted as a "shared path to a more climate resilient Canada."

Insurance Bureau of Canada and members of the Climate Proof Canada coalition have worked closely with government staff and officials to assist in developing Canada's first and much needed National Adaptation Strategy. Representatives from 30 insurance companies devoted thousands of hours of resources and expertise to support the federal government's Task Force on Flood Insurance and Relocation. The policy work is complete. It's now time for investment and implementation.

The growing number and intensity of climate-related disasters should concern all Canadians, even if they have yet to be directly affected. Across Canada, property and casualty (P&C) insurers are already seeing signs that property insurance may become less affordable, or potentially even unavailable.  This is because companies that provide reinsurance – also known as insurance for insurers – are adjusting their prices to reflect new and growing risks around the world, including climate change.

Defending against climate-related impacts will never be easy for a country as large as Canada whose climate is warming more quickly than much of the rest of the world. Indeed, the short-term impacts of the climate crisis are just beginning.

That's why the federal government must act now to bring a sense of purpose – and meaningful resources – to its efforts to better defend Canada and Canadians from the growing threat posed by climate-influenced disasters.

The P&C insurance industry stands ready to collaborate by rapidly scaling and delivering a funded national flood insurance program to ensure Canadians remain financially resilient to climate change.

About This Author

Celyeste Power is President and Chief Executive Officer of Insurance Bureau of Canada.