IBC to pilot new tool to assess municipal climate change risks

Insurance Bureau of Canada (IBC) has approved Cdn$1-million pilot project for a new municipal risk assessment tool that will help insurers assess climate change risks.
The new tool is intended to collect key data that will help insurers better understand the risk of future water and other climate-related claims.
The federal government has picked up half of the tab for the cost of piloting the tool, which will be tested in 10-15 small to mid-sized municipalities in Atlantic Canada. The tool will also be tested in Hamilton, where 6,000 houses recently were damaged in an area not usually known for that kind of claim.
A date for the rollout of the pilot project was not disclosed.
Specifically, the tool will help analyze the following municipal data:
•    the age and design of sewer and surface water systems;
•    the maintenance and operation of those systems;
•    the urban development policies that influence system capacity; and
•    topographical features like elevation and soil type, which affect risk and vary broadly within large, urban centres.
Zurich Insurance president and CEO Alister Campbell, a member of the IBC committee focusing on adaptation to climate change, introduced the tool during a speech to the IBC’s Ninth Annual Regulatory Affairs Symposium. [The actual name of the tool has yet to be determined.]
In his speech, Campbell said the retrospective data normally collected by the industry has been insufficient when it comes to predicting future claims related to climate change. In lobbying governments, insurers were unable to say which municipalities faced imminent risk, he said.
The new tool is a way to help predict where future damage may occur.
“The tool will allow us as an industry to ‘put our money where our mouth is,’ by using risk-based pricing to reward municipalities that heed our advice and take steps to protect their citizens against the effects of severe weather brought on by climate change,” Campbell said.
It will also act partly as a business tool, Campbell said.
“By helping us accurately price risks that we couldn’t quantify before, the risk assessment tool allows companies to write business they might not have before, and that will enhance competition, make insurance more available, and create a more rational and fair pricing system.”