Flooding has hit Montreal, Ottawa and Gatineau hard, with hundreds of households under evacuation order.
The outer boroughs of Canada’s second largest city have near waist-high water levels while many of Gatineau’s residential streets look like canals. Montreal even saw soldiers assisting with an evacuation and the piling of sandbags.
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As a result, the Quebec government is donating $500,000 to the Red Cross and more money could be on the way in the form of Disaster Financial Assistance Arrangements (DFAA).
However, the prospect of financial aid is not enough - insurance brokers also have a crucial role to play in whether flooded Canadians get DFAA government assistance.
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If a broker had offered homeowners affordable overland flood insurance and the policyholder turned that offer down, then that homeowner may also be turned down for Disaster Financial Assistance Arrangements (DFAA).
The broker may be asked by the provincial or federal government to verify whether or not a client was offered overland flood according to
Insurance Bureau of Canada’s director of catastrophe risk and economic analysis, Lapo Calamai.
“The single biggest issue emerging for brokers and agents is E&O liability,”Calamai, who’s speaking at the Flood Risk Summit 2017, said. “Particularly when it comes to the interaction between private insurance and government run financial assistance (DFAA).”
Often governments rely on brokers to certify that the homeowner didn’t have flood coverage and isn’t receiving an insurance payout in order to make that homeowner eligible for disaster financial assistance from the provincial or federal government. Additionally, if the broker informs the government that the homeowner was offered flood coverage but declined to purchase, that makes the homeowner ineligible.
This situation puts an immense onus of responsibility on brokers, according to Carol Bolduc, personal lines manager of Burns & Wilcox Canada.
“The broker has a responsibility to ask ‘Do you have flood coverage?’ or ‘Are you aware you don’t have any flood coverage on your policy?’ then the insured would say ‘Oh, I don’t have it and I need it, can you sell it to me?’ It’s an eternal selling point,” Bolduc said.
The good news is that brokers appear to be generally well prepared for the responsibility they face with the amount of knowledge accrued in the insurance industry around flood having grown significantly over the past few years, according to Jim Eso, senior vice president of P&C at Crawford and Company.
“The event itself is under different circumstances but not unlike, in terms of potential scope, the 2013 flooding events in greater Toronto,” he said. “The insurance industry itself is prepared for this type of situation. Our company, as independent claims adjusters, we have our catastrophe team of adjusters at the ready. So we’ve been having calls with our clients, the insurance companies, this afternoon, assessing what they need.”
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