By Cheri Armstrong
Climate change is a hot topic in Canada these days, and for good reason. According to a 2014 Government of Canada study, the average annual temperature in Canada has warmed by 1.6°celcius over the period 1948 to 2013 — a higher rate of warming than in most other regions of the world. Experts predict that such a shift in climate will continue to prompt weather events from coast to coast. As a result, insurers across the country must be agile in adapting to the needs of their customers and increasingly common weather-related claims.
Bill Warden, Director of Corporate Underwriting at Economical Insurance
, believes that one of the keys to keeping up with our changing climate is to make new and improved coverages available to the vast majority of policyholders. He cites the fact that at least 5 major insurance companies have introduced overland water coverage in the last 12 months, including Economical. “A full 96% of our current customers now have access to our new Waterwise coverage, while nearly 2/3 of them actually had it read in to their current homeowners policies at no extra cost,” he said. “That wasn’t the case even 5 years ago, and it’s a testament to how our industry is changing to accommodate the needs of our customers.”
It’s little wonder why. The Insurance Bureau of Canada reports that from 2009 to 2014, insured losses from catastrophic events were close to or above $1 billion each year — most of which was due to water damage. In 2013 alone, insurers paid out a record-high $3.2 billion to policyholders. And even with financial assistance from the federal government, flood victims are often out of pocket by tens of thousands of dollars. That’s why making new and improved products available is a priority for most.
“As time goes on, we’ll need to continue to customize coverage options for weather-related events that are being driven by global warming, so we can make coverage available to those who need it most,” says Warden. For this reason, we’re seeing unique coverage options develop for several other types of losses, including earthquakes, hail, and sewer backup.
For brokers, the increased availability of such products is a welcome change, as are the additional support and marketing dollars from insurance companies that help inform customers about these new options and what they need to stay protected. Some of the most frequently used tips from brokers are simple in nature but worth repeating, especially to unknowing customers:
- It only takes a few inches of water from a fresh water flood to cause thousands of dollars in damage to their homes.
- Knowledge of flood-prone areas is crucial. Customers can look up local flood maps and find out if their neighbourhood is in a floodplain. Some conservation authorities and provincial agencies provide these free of charge.
- Flood insurance varies considerably across Canada and price is based on risk. If customers live in a flood-prone area, the simple fact is that they’re going to pay more for coverage.
At the end of the day, there’s not much that can be done to prevent wild weather on the horizon. But by educating customers on risks and continuing to offer innovative coverage to help offset losses, the industry is starting to keep pace with shifts in climate. And that’s one change we can all look forward to.