Climate change had led to an uptick in the frequency and severity of water-related catastrophes for municipalities – and insurers are in a prime position to share knowledge as cities fine tune their flood strategies says an environmental expert.
“Flood is becoming the new fire,” says Shawna Peddle, Director of Partners for Action and a member of the Faculty of Environment at the University of Waterloo. She adds that insurers should ensure flood is top of mind for clients. “People don’t tend to think about flood and what it does to your home – they know they have to protect against fire, they know they have to protect their car from being stolen, but they don’t think they have to protect their home against water.”
However, the real challenge lies beyond consumer adoption as municipalities aren’t always willing to confront the emerging flood threat. “We know that flooding is a source of socio-economic vulnerability for communities, regardless of their size, regardless of where they are in Canada,” says Peddle. “Our municipalities know deep inside that action now will save them money later, but they’re also dealing with competing priorities. So how does a municipality justify updating their pipes when they need a new rec centre?”
Many cities are ill-prepared to weather a catastrophic flood event, either due to aging infrastructure or relying too heavily on defenses without a backup plan. The climate change dialogue can also be a point of contention for some, despite evidence that severe rain events are on the rise. “Some of the common oversights we see with municipalities, particularly at the elected official level, is not buying into climate change,” Peddle says.
She points to the flooding that affected southern Alberta in 2013, which resulted in over $5 billion in repair costs. “Calgary was a perfect combination of different events – you had massive melts in the mountains with a big rainfall, so you had the water coming down, but you also had a massive rainstorm focused right over the downtown. So when you have all those things coming together, no one event can be linked to climate change, but we’re seeing these events more and more frequently. The trend can be linked.”
Where insurers can step in, she says, is by sharing data and underwriting insights with risk managers in other sectors in order to create informed flood solutions.
“You have insurers who are developing their own maps, understanding their own hazards, and underwriting the risks based on that,” she says. “But if they could bring the municipalities, federal and provincial governments together at one table, we could pool those resource and better use the science that we have and the expertise that we have.”
“I really think it’s a huge opportunity for the insurance industry.”
Want to learn more about growing overland flood risk? Check out Insurance Business Canada’s upcoming Flood Risk & Insurance Masterclass on June 16.