Changing climate and weather patterns are leaving clients increasingly exposed to overland flood risk – yet many homeowners continue to underestimate how vulnerable they are.
It’s a significant gap says Cyndi Seifried, program director of Flood Initiative at The Co-operators, which recently launched an overland flood endorsement solution for Ontario.
“People are very unaware of the risk that they actually have,” she says. “Many people think that because they haven’t had water before that they’re never going to have water, and that’s just not the case.
“We also know that people think of home insurance as a commodity product. People don’t think about niche products which, realistically, flood is; some people will have very, very little risk, and other people will have significant risk.”
Overland flood coverage has been viewed as an underserved area of the market; carriers have pushed for product development, especially as it was revealed that many homeowners lacked sufficient coverage following the 2013 southern Alberta floods.
“We know that it’s been a growing need – but up to this point, we didn’t have the information or data available to be able to put a product on the market, which was why we needed to do the research in order to quantify the risk,” says Seifried.
“We know that with climate change and the changing in weather patterns, it’s going to be a growing risk, and from a cooperative perspective, we wanted to be sure we were filling an unmet need for clients in Canada.”
The Co-operators new Comprehensive Water endorsement will cover damage due to the overflow of water bodies, sewer backup, and accumulation of surface water caused by heavy rain.
However, Seifried says that while new products are coming to market to fill the need, more must be done to properly educate policyholders on the amount of coverage they need – and the onus doesn’t just rest with the insurance industry.
“I think it really needs to be a joint effort between the federal, provincial and municipal governments as well as insurers – including lenders in real estate,” she says.” bankers and financial institutions need to also have a better understand the risk because at the end of the day, they’ll be the ones left with the risk if there’s no insurance.”
She adds that it will be “interesting” to see how the overland flood landscape develops, and the types of coverages to come to market. “I know that insurers all feeling the need to respond, but the reality is not all products are equal - and people need to understand that,” she says.
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