Flood insurance access hinges on new maps: CEOs
OTTAWA—Insurance executives say homeowners never will have access to comprehensive flood insurance in Canada unless there are new maps of flood-prone areas that take climate change into account.
That’s the finding of a study that surveyed senior executives at 13 Canadian insurance firms on extreme flooding, which devastated parts of southern Alberta and Toronto this year and is becoming more frequent across the country.
Canada is the only G8 country where this so-called overland flood insurance is simply not available in the private sector.
“Most insurers agreed that existing flood maps are inaccurate, outdated, and inadequate for insurance purposes,” said the study by two experts at the University of Waterloo.
“This data gap poses a clear threat to the viability of flood insurance,” it added.
The Canadian Press obtained an advance copy of the report by academics Blair Feltmate and Jason Thistlewaite, which was to be released today.
Their research was paid for by the Co-operators Group Ltd., a large insurance firm.
The insurance industry is sharply focused on flooding, which in the last 15 years has become their biggest payout area.
That’s because of extreme weather events the executives agree are linked to climate change.
“The big cost now . . . is flooding basements, by a country mile,” noted Feltmate.
“So it’s really high on their radar screen.”
Canada has seen 289 flood disasters since 1900, the largest such category—more than the number of hail, wildfire, and winter storm disasters combined in the same period.
Floods are expensive. The southern Alberta floods this summer are estimated to have cost private insurers $2.25 billion—even though damage to residences generally was not covered.
In 2011, floods in Manitoba and Quebec also racked up millions in payouts.
The federal and provincial governments also are exposed to huge costs under the Disaster Financial Assistance Arrangements, which pay a disproportionate amount for overland flooding compared with storm, hail, and wildfire disasters, which often already are covered under private policies.
Existing sewage back-up coverage also is hurting private insurers’ bottom lines because climate change results in more torrential downpours that overwhelm aging municipal infrastructure and can’t be absorbed by an ever-more-paved urban landscape.
Feltmate cites the example of a Toronto neighbourhood, south of the Downsview airport, where a large percentage of basements were flooded three times since May of this year.
Executives would consider offering overland-flood insurance, said the survey, but can’t begin to draft policies or set premium levels until proper maps accurately identify the new risks arising from a warming planet.
“We need new flood-plain maps that take into account not the historical weather but the weather that can be expected going forward,” said Feltmate.