Canadian Underwriter

How brokers are affected by carriers competing on flood maps

March 16, 2022   by Alyssa DiSabatino

A river overflows it's banks during heavy rains. A yellow house is pictured to the left of the river and trees line the center of the image.

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Add a single flood map to the wish lists of several brokers, who are having a tough time dealing with individual insurance companies competing on flood maps.

A Canada-wide flood map has yet to be implemented across the industry, and so many insurers have commissioned their own maps. But if one insurer’s flood map shows a client is at risk of flooding, and the next insurer’s map doesn’t, does it create a competitive advantage for one insurer over another?   

One broker says it could, but it’s “by their own choice.” 

In an interview with Canadian Underwriter, Scott Logan, director of personal lines at Mitchell & Whale Insurance Brokers, walks through how he finds water damage coverage for a client.  

He looks at three different insurers and compares the coverage they offer to one home address.  

With Company A, “you can see that they’re giving sewer backup coverage of $1.23 million,” he tells Canadian Underwriter. “Groundwater is included, overland water is included and above groundwater is included. So that is full coverage. I would have no problem presenting this quote to any client that calls.”  

But with Company B, he finds sewer backup coverage and overland coverage “has been removed due to the proximity of the location to water.”  

With Company C, “they’re giving full coverage for sewer backup. But they’re limiting overland water to $50,000. They’re saying, ‘Yes, there’s a risk, but we’re not willing to insure you for all of your house and contents. But we will offer it up to $50,000,” Logan explains.  

The different quotes are based on the fact that each company’s map presents different levels of risk for the same home, or what Logan calls “three completely different spectrums of coverages.” If one company’s flood map offers a competitive advantage over the other, he says it’s because the companies “have their own internal teams that make that determination [on the data].”   

The broker just sees “the end result of their decision,” Logan says. “It prompts us to have a very different discussion with the customer, because maybe the cheapest policy is providing the least amount of coverage.”

As a broker, he adds, “it’s never going to be about price. It’s going to be about coverage.” 

When overland flood coverage was first introduced to the industry shortly after the 2013 flood in Calgary — and weeks later, during the same year, Toronto experienced major flooding — it was difficult for brokers to navigate insurers’ many different policies, Logan says.  

“And it still kind of is, because [insurers] all want to call it something else,” he says. “They all have their own little niche needs for it. But at the end of the day, it’s coverage for flood and overland water, and no matter what it’s called, that’s what it is.” 

Is it better for brokers to have one Canada-wide map or multiple, individually commissioned maps? 

Logan says brokers would prefer that insurers all use the same flood map but doesn’t foresee it happening. Even if the federal government finally does update its flood maps, he predicts insurers will stick with their own. 

“[Insurance companies] do what is, in their opinion, the best for their company based on their actuarial stats and so on. It’s just something we’ve come to live by.”  


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