Canada's long-promised national flood insurance program is unlikely to launch on its original timetable, despite rising flood risk and mounting losses, according to the federal minister responsible.
Federal Emergency Management Minister Eleanor Olszewski (pictured) told reporters she could not commit to introducing the scheme “in the near future”, describing it as “top of mind” but complex to design and implement. Her comments cast doubt on the government’s previous pledge to have a low‑cost national flood insurance programme in place by the end of 2025.
The initiative was first promised by then prime minister Justin Trudeau in 2019 as an affordability measure for households in flood‑prone areas that struggle to obtain or afford private flood cover, according to a report from The Canadian Press. The government did not formally begin development work until 2023, when the federal budget allocated $31.7 million over three years to establish a low‑cost flood insurance programme for high‑risk households without adequate cover.
On Tuesday, communities in several provinces were under flood warnings, with areas near Sudbury, Ontario, and Gatineau, Quebec, declaring states of emergency. A 2022 report by Canada’s Task Force on Flood Insurance and Relocation estimated the average annual cost of residential flooding at about $2.97 billion, including both insured and uninsured losses. The task force’s wider analysis suggested flooding has caused roughly $1.5 billion in damage each year to households, property and infrastructure, with residential property owners bearing around three‑quarters of uninsured losses.
The task force was established to examine models for a national approach to flood insurance, including options for low‑cost cover in high‑risk areas and the potential relocation of homes facing extreme, repeat‑loss risk. It considered international examples such as the US National Flood Insurance Program and recommended a public‑private model for Canada, with capped premiums and explicit risk‑sharing between federal, provincial and territorial governments and insurers.
Designing that kind of scheme has proved politically and technically challenging. Ottawa is seeking to balance three competing aims: making cover affordable for high‑risk households that currently cannot access overland flood insurance; avoiding an open‑ended taxpayer subsidy for properties that flood repeatedly; and persuading provinces and municipalities to align land‑use planning, building codes and buy‑out policies with any federal backstop.
The federal government’s mid‑term review of the UN Sendai Framework notes that a national flood insurance programme will require close co‑ordination with provincial relocation and mitigation efforts, as well as “new institutional arrangements” across levels of government.
In the absence of a federal scheme, private insurers remain on the front line of rising flood losses.
The Insurance Bureau of Canada has estimated that around 1.5 million Canadian households are highly exposed to flooding and currently cannot obtain overland flood insurance through private markets. For those that can, premiums can be substantial: recent analysis suggests flood cover can add up to $15,000 a year for some high‑risk properties, even where limits are capped and deductibles are high.
The 2022 task force report highlighted that standard home policies have historically excluded overland flood, and that water damage now accounts for roughly half of Canadian home insurance claims. It also found that only a minority of at‑risk households currently purchase specific flood cover, leaving a sizeable protection gap.
Meanwhile, the Bank of Canada has warned that flood risk can affect residential lending, since homes act as collateral for mortgages and home‑equity loans. Without widespread flood insurance, lenders are more exposed to a loss of collateral value after major events, particularly in high‑risk areas where long‑term viability may be in question.
For insurers and brokers, Olszewski’s comments mean continuing to operate in a patchwork of private flood products, exclusions and sub‑limits while demand for protection rises. Pricing and underwriting in high‑risk zones will remain under pressure, with reputational and political scrutiny around affordability and “uninsurability”. There is still no clear view of how a future national scheme would allocate risk between Ottawa, provinces and the private market, or how existing overland flood products would interact with any public backstop.
The delay prolongs uncertainty over how flood risk will ultimately be priced into mortgages and asset values, particularly in communities that could be candidates for future buy‑outs or strict rebuilding limits.
Until a federal‑provincial framework is agreed, carriers, brokers and managing general agents will remain central to bridging the protection gap through product design, risk selection and resilience advice, while managing their own accumulation and capital constraints in flood‑exposed regions.
