What started as a property insurance forum for Alberta’s insurance association members has grown to include representatives from across Canada – a meeting of government and industry players the likes of which have never been seen before, says one broker.
And it will tackle the most controversial of all topics – the possibility of overland flood insurance in Canada. The topic gained prominence after two flooding events in Calgary and Toronto cost Canada’s largest insurer an estimated $490 million, with an industry-wide estimate of losses not yet complete.
“This will be a ground-breaking conversation,” says the president-elect of the Insurance Brokers Association of Alberta, Gord Cowan. “I can’t remember the last time we’ve had all these high-level people in the same room. We’re getting the highest level of participation from insurance companies from across Canada and the home builders’ associations and government.”
Cowan, the owner of Cowan Agencies in Medicine Hat, Alberta, is excited that the 92 participants (including those government officials who will be there in an observational capacity) will be making historic decisions on the future of insurance underwriting in Canada.
“This will be an interesting and important meeting, and it will definitely spawn more meetings by Christmas,” he told Insurance Business. “The Canadian Home Builders Association, the Institute for Catastrophic Loss Reduction, insurance representatives from B.C., Manitoba, Ontario… the Reinsurance Research Council,
Intact Insurance,
Aviva, Dominion…
“It is the first type of meeting of this kind, and flooding is going to be at the top of the agenda.”
Recent flooding in Calgary and High River has left insurance companies scrambling to find coverage, and has reignited the debate about the lack of flood coverage in the basic homeowner’s insurance policy.
“There is no flood insurance here in Alberta, and that has left us finding coverage in the sewer backup policies,” says Peter Fischer, senior insurance consultant with Lundgren & Young Insurance in Calgary, Alberta. “We’ve had discussions for years and years on making flooding a part of the basic insurance – and certainly this will open the dialogue again.”
Brokers in the prairie province have reported that Canadian insurance companies have been finding coverage for flood victims in the sewer backup policies – a move that has spurred debate about whether overland flooding (which isn’t covered in basic home insurance policies) can in fact trigger insurable sewer backup losses inside a home.
The argument against flood insurance has been cost, says Fischer. Clients who do not live in flood zones balk at paying extra for something they consider unlikely to occur.
“They wouldn’t buy it, flood insurance,” he told Insurance Business. “They would tell us that they don’t have the extra $50 or $75 or whatever for coverage. But if flood was included in the basic policy on homes, then the client couldn’t delete it, and it would be workable.”
Cowan agrees that cost needs to be within the reach of the ordinary householder for it to work.
“We have to be very conscious of the cost of flood insurance, and we have to be responsive to the public to make it affordable,” he says. “We need to start looking at alternative ways of covering people – particularly through mitigation of damage. This too will be at the top of the agenda.”
