Insured catastrophic losses in Canada reached almost $2 billion in 2018. This contributed to a significant increase in the insurance industry’s combined loss ratio – up to 101.4% from 95% the year prior – and a dramatic $1.3 billion industry net income decrease compared to 2017. The huge jump in insured catastrophic losses was unprecedented in that it was the result of many small adverse weather events as opposed to one devastating incident like the Fort McMurray wildfire.
One of the biggest challenges in Canada over the past few years has been overland flooding. Of late, the response to that challenge has been largely positive, with regulators across Canada supporting flood mitigation programs and pumping funding into loss prevention schemes. For example, the Alberta government recently gave $7.6 million to the Cooperative Stormwater Management Initiative, which aims to relieve ongoing flooding issues by using new and existing infrastructure to collect, store, and move stormwater in the region.
The federal government has also recognized flood as a top concern. After a number of devastating floods in Ontario, the national government announced that $150,000 in federal funding will be set aside to support updated flood mapping of the Lake Ontario shoreline under the National Disaster Mitigation Program (NDMP).
The money being pumped into flood mitigation projects across Canada is partly down to the persuasive efforts of the insurance industry. “We have grabbed the attention of the federal government around the need to reduce the financial costs of overland flooding,” explained Celyeste Power, vice president, western region, at the Insurance Bureau of Canada (IBC). “We have accomplished this by offering to reduce the impact to all Canadians. A core component of these efforts is what we call ‘a whole of society approach’.”
The end goal is simple, according to Power. It’s to create an environment where every Canadian who needs it has access to affordable flood insurance. Achieving that goal and reducing the risk of flood in Canada requires involvement from a number of key stakeholders, including consumers, all levels of government, indigenous leaders, and of course, the insurance industry.
“Together we can get to the right solutions. We can make land-use and permit decisions that don’t put people in harm’s way. We can also choose the right infrastructure to protect Canadians,” said Power during the ‘Innovation, Regulation and Change in the Insurance Industry’ panel at the RIMS Canada conference in Edmonton. “The IBC and like-minded partners are advocating for a national action plan on flooding in order to reduce everyone’s risk of flood. The plan should, in our view, stop putting people in harm’s way, educate Canadians about their risk of flood, invest in flood defences, and, of course, provide all Canadians with access to affordable flood insurance.
“We’re talking directly to Canadians as well. As I mentioned, they’re one of the main stakeholders in our whole of society approach. We want them to understand their personal risk, and then encourage them to demand change from government, because right now, consumers are footing the bill in two ways. Firstly, they have insurance and they’re paying out through their insurance premiums for the increase of severe weather that we’ve seen; and secondly, we’re all paying out through our taxpayer dollars as well – and people are just frustrated.”