As flooding hits southwestern Manitoba with a ferocity reminiscent of last year’s deluge that paralyzed southern Alberta, the urgency for a national disaster mitigation strategy has come to the forefront once again.
“Given the urgency of the situation and the very real threat to our communities and to society,” says Jonathan Turner, chief financial officer for
Swiss Re Canada, “now is the time to turn talk into action and implement the National Disaster Mitigation Strategy – before the next big storm, fire or quake.”
Turner points to 2013 as a record-setting year when the country suffered two natural disasters causing more than $1 billion in damages.
“It was also the fifth consecutive year of billion-dollar events,” says Turner. “Canada is exposed to many different natural disasters with earthquake, winter storm, wildfire and flood being among the most likely to impact our lives and economy. For years we escaped relatively unscathed until last summer's devastating flooding in Alberta and Toronto.”
June and July mark the one year anniversary of these events – the largest insured losses in Canada's history with approximately $3 billion in payments and more than double that in economic losses.
“It's vital that we don't continue to ignore these threats because if we do, we do so at our own peril,” says Turner.
The former president and CEO of Swiss Re Sharon Ludlow was at the forefront of bringing about fundamental change to how catastrophes are handled in Canada. The Alberta forum held in the fall of 2013 gathered stakeholders from across the county to discuss the nation’s property coverage policies. (continued.)
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“Thirty-five years ago the three biggest costs were auto damage, fire damage, and property theft. These risks have declined,” Paul Kovacs, executive director of the Institute for Catastrophic Loss Reduction, told the Insurance Brokers Association of Alberta Property Insurance Forum delegates. “Sewer back up, wildfire, wind, hail, and other natural disasters have risen. In the last decade, we pay five times more for weather-related losses than for the other perils.”
The cost of Canadian natural disasters is rising dramatically, agrees Turner.
“Consider the increasing frequency and severity of events and add to that the fact that development continues to place more valuable assets such as buildings and homes in at-risk areas, and you have a recipe for potential disaster,” he says. “Don't take the insurance industry's word for it. The cost-sharing arrangement between the federal government and provinces and territories (DFAA) for disasters has ballooned in a short time. In fact, 96 per cent of all payments made from the DFAA have happened since 1996 and the program has existed for nearly 45 years. On average, nine payouts were made annually in the previous decade, but in 2011 there were 26.”
Of greater concern, last year the Canadian Forces announced it will begin charging local governments for assistance provided in the wake of natural disasters.
“This type of assistance is critical to our economy,” says Turner, “and cannot be sustained without the help of other mechanisms, including pre-event risk financing.”
Canada has sought to address some of these issues by developing a blueprint for resiliency – a National Disaster Mitigation Strategy. Now is the time to finish the job and implement it, says Turner.
“If not, the next wildfire, quake or storm could be crippling– not only to individual citizens, but to local economies,” he says.
