Is the industry doing enough for Canada's flood-prone cities?

Is the industry doing enough for Canada's flood-prone cities? | Insurance Business

Is the industry doing enough for Canada
During its recent ‘Three to Watch’ segment on CBC’s The National, host Wendy Mesley asked her panel whether insurers should be forced to offer flood protection in Canada.
While two of the speakers emphasized the need for carriers to promptly develop a solution to help protect their reputations with consumers, HuffPo Canada’s blogs editor mentioned that coverage options may not always be plausible given the risks involved. 
“It’s possible that perhaps our premiums would just be triple what they are now if it were different, and maybe we wouldn’t stand for that as consumers,” said Marni Soupcoff. “Right after a disaster is a bad time to judge the policy.”
Robert Muir, a professional engineer with 25 years of experience in flood risk assessment and management, agrees, and believes that the onus shouldn’t rest entirely on the industry’s shoulders.
“Flood risk management should start with prevention of highest risks and that requires effective policies by the province and implementation by the Provincial Policy Statement, and implementation through underlying acts and regulations,” he said.
Muir currently manages the long term flood remediation strategy for a Toronto-area municipality and writes on urban flooding at and He points out that developers in Ontario are allowed to develop anywhere above the 500-year flood limit, whereas their counterparts in Alberta can build on lands “below the more frequent 100-year flood plain.”
Given that Alberta’s regulations allow for such a heightened likelihood of damages, he feels that insurance companies should not be the ones responsible when they eventually occur.
“The insurance role should not be to insure the highest risks (which creates a moral hazard) so that appropriate investment decisions can take place and so that the most appropriate use of high risk land can evolve.” Such uses, he suggests, include re-purposing zones for public parks.
He backs this assertion by referencing two pieces of litigation where municipalities were found to be liable for personal property damages sustained by unmanaged runoff: Scarborough Golf Country Club Ltd. v City of Scarborough and the class-action lawsuits in Stratford, Ontario.
“I see the province being more culpable in Alberta, as well as the municipalities, for their zoning and allowing high-risk developments without properly informing the public.”
While Muir does acknowledge that insurers play a larger role in riverine flood risk management through such efforts as urban flood remediation studies, he does not think it is their imperative to do so. .
“Risk prevention should come first through provincial/municipal intervention, programs and policies,” Muir said. “If insurers are asked to subsidize flood insurance or not have risk-based premiums, then that seems irrational for shareholders and low-risk policyholders respectively.”