After a spring that brought intense flooding to parts of Quebec, Ontario and New Brunswick, the warning sirens about the already very real risks of climate change are going off again, with municipalities across the country requesting government funding to address flood resilience.
The topic of flood risk was hard to avoid during a fireside chat between the Insurance Brokers Association of Canada (IBAC) CEO Peter Braid and the Insurance Bureau of Canada (IBC) CEO Don Forgeron at the Insurance Brokers Association of Alberta’s (IBAA) 2019 convention.
“This issue represents another huge opportunity [for] IBC and broker associations to collaborate to ensure that Canadians are better served in terms of getting flood coverage, if they’re eligible,” said Braid, adding that more clarity around the overland flood product is needed within the broker channel. “There’s still some confusion [and] some frustration about the fact that flood products vary significantly between insurance carriers. Insurance carriers use different proprietary flood mapping software, so a house may be eligible with one carrier but not another, and after the devastating floods we’ve seen across the country in the last few weeks, this has to be a huge opportunity for us to better serve our communities, our consumers, and Canadians.”
Nonetheless, there are big-picture obstacles in the way of communicating the risk of flooding to Canadians, explained Forgeron, such as the relatively short-term memories of people when they’re hit with a weather-related catastrophe, as well as government leaders’ inconsistent messaging around the need to rebuild communities with future flooding in mind.
“We do need to do things differently going forward, but we have a flood product now that five years ago we didn’t have,” he said, adding that the same problem around flooding comes up every year, which is how you insure properties in this risk’s line of fire. “You need to come up with ideas for that, and we’ve got to raise the level of awareness with Canadians, [though] there’s some excellent work being done at the national level [and] I do think we’re inching closer towards a national flood program,” thanks in part to the ongoing work of the Minister of Public Safety and Emergency Preparedness, the Honourable Ralph Goodale, in keeping flood top of mind with government leaders, communities, and other stakeholders.
When it comes to the evolution of flood insurance, the Canadian insurance industry could learn a thing or two from Australia, where the federal government tasked insurers with determining a common definition of flood for insurance policies, or else the government would do so, according to Forgeron.
“There always will be competition, [and] there always should be competition. Companies want to differentiate themselves from their competitors – if they want to offer a better price, if they want to offer more coverage,” Forgeron told the audience. “It is a free market system, but there’s probably a box that the industry someday will play in.”
The role of brokers is likewise critical as flood insurance develops to better protect policyholders.
There are still questions around “the consistency of coverage, what constitutes a flood, what’s covered, what isn’t covered, how much is covered and so on,” said Forgeron, pointing to a story about one broker who was frustrated with the variations in coverage within one community. “That’s an issue that we need to deal with, and we get that directly with the feedback from brokers.”