Canadian Underwriter

Will the Maritimes be insurable if climate change left unchecked?

July 29, 2018   by Jason Contant

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The financial costs of flooding in the Maritimes could increase dramatically by the end of the century under a “business-as-usual climate scenario,” even without accounting for changes people have made to the environment that could increase exposure, according to a new study.

Researchers at Ontario’s University of Waterloo looked at the Halifax, N.S. area, a region hard hit by recent riverine flooding. The team merged data on flood probability, climate change and financial payout information from the (re)insurance market and used the information to develop a forecast.

The research team ran models for two different climate change scenarios and found a “significant difference” between best- and worse-case climate scenarios, the university said in a press release Friday. If no action is taken to stall climate change (a 4°C rise in global temperatures), the Halifax area could incur $67 million in damages in the event of a severe (1-in-100-year) flood. By contrast, if temperature rise can be limited to 2°C, damages would be $10 million for the same event.

“Until recently, there hasn’t been a lot of work exploring what increased flooding will cost, and who will get stuck with the bill,” Andrea Minano, coordinator of the Canadian Coastal Resilience Forum and a researcher at the university’s Faculty of Environment, said in the release. “The increases in flood losses put into question the long-term insurability in the Halifax area, and highlight a broader problem facing many other areas in Canada if no actions are taken to mitigate and adapt to climate change.”

Minano said that the difference between these scenarios shows “just how exponentially worse things can get without action. It also shows governments need to plan for rare, but high-impact flood events, warn citizens and not build in high-risk areas.”

The study Application of re/insurance models to estimate increases in flood risk due to climate change was published earlier this month in the journal Geoenvironmental Disasters.

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