Canada’s changing climate has been a topic of mass discussion in the past week following a report by Natural Resources Canada that states both past and future warming in Canada is, on average, about double the magnitude of global warming. The government-backed ‘Canada’s Changing Climate Report,’ details how Canada’s climate will warm further in the future, driven by human influence, and how the effects of widespread warming are projected to intensify in many parts of Canada in the future.
While some Canadians remain uncertain as to the validity of climate change, no-one can ignore the rising influence of extreme weather across the country. The report explains how a warmer climate will intensify some weather extremes in the future, including the increased frequency and severity of heatwaves, drought and wildfire risks. Furthermore, precipitation is projected to increase for most of Canada, and coastal flooding is expected to increase in many parts of the country due to local sea level rise.
“The long-term trends are clear. We’re facing longer periods of drought, leading to more forest fires, and we’re experiencing more storms, major hurricanes, and extreme rainfalls, leading to more frequent and intense flooding,” said Don Forgeron, president and CEO of the Insurance Bureau of Canada. “These events are no longer only affecting areas that have traditionally been exposed to these risks. Twenty per cent (20%) of Canadian households now have some vulnerability to flood, and that figure is increasing. The risk of wildfire continues to grow as well.
“There’s no question that we’ve entered an era of increased threat to life and property. From 1983 to 2008, CAT insured losses in Canada averaged about $400 million. Over the last decade that number jumped up to about $1 billion per year, and it was closer to $2 billion in 2018 - and that was without a single large event. So, we’re seeing more severe weather events, more damage, more insurance claims, greater strain on the government treasury, and increased heartache and anxiety for countless Canadians, especially those who live in harm’s way.”
The parliamentary budget office has been blunt in stating the federal government is financially unprepared for the likely cost of future disasters. In the most recent budget, the government made a modest provision increase for disaster payments, but the chest is still nowhere near deep enough, according to Forgeron. However, there are specific and meaningful actions that governments can take to help Canadians adapt to the reality and the impact of climate change, and the insurance industry can be a key stakeholder in that.
The first important step, according to Forgeron, is to invest more in consumer education. Public attitudes about natural disasters are often based on lived experiences. Even in high-hazard areas, flood is still perceived by many as a generational event, and the chances of wildfire continue to be seen as largely remote. Before people can respond and adapt to a threat, they need to understand it, Forgeron added.
“I think there’s general acceptance of climate change in Canada. There will always be people who say they don’t believe in it, and in those situations, it’s best to set the concept of climate change off to the side and to talk about the changes we’re already seeing,” said Monica Ningen, president and CEO, Canada & English Caribbean Swiss Re. “The question of why changes are happening – we can debate that, and we can get into intellectual conversation around the proof of it – but as you look across the world, there are active changes happening today. If you go to Miami, Florida, it floods on a regular basis because of sea level rise. With wildfires, you just have to look at Fort McMurray and what’s happened in California. We can talk about the intellectual conversation of climate change, but for anybody that wants to challenge it, they will have a very hard time challenging the real-life data of what’s impacting our world, what’s impacting our industry, and ultimately, what’s impacting our consumers.
“I think sometimes consumers sit back and think: ‘It’s not going to happen to me. My house isn’t going to flood. There won’t be a big earthquake where I live.’ They see it as such an unlikely event that they really don’t see themselves as part of that conversation. I look at it from the standpoint of: it’s not if it will happen to you, but when it will happen to you. Something will likely impact you in your lifetime.”
In addition to consumer education, governments can also take steps to target priority infrastructure investments, while also improving land-use, building codes and building standards. This means making investments into water systems, sewage systems and flood defences, while also discouraging and preventing the building of homes and vital infrastructure in high-risk flood zones.
“We can find a measure of common ground when it comes to climate change,” said Forgeron. “Most people accept that it’s real and most agree that we should do something about it. Over the long-term that means reducing emissions. In the short term, it means adaptation – taking action to defend ourselves against the initial impact of the changing climate. Both of these responses are important, and both require the same attention of our policymakers.
“When it comes to the climate, we [the insurance industry] need to be the ones encouraging others to adapt – government and citizens alike. We need to be leading, guiding and influencing the discussion. We need to step up, speak up and make it clear to Canadians that we need progress on adapting to the climate-related challenges our country will face in the coming years.”