What to do about Water

The alarming number of water damage insurance claims last year is part of a continuing pattern related to urban and riverine flooding in Canada. Insurers, brokers and governments cannot control the weather, but they can dramatically reduce the impact of flood on properties across Canada. The time for action is now.

Last year hit a dubious watermark, so to speak. At Aviva Canada, just over half of all of its property claims involved water damage, representing $190 million in water-related losses in 2013. Other insurance companies are reporting similar loss figures.

This is not an anomaly or a surprising spike. The insurance industry as a whole was hit with a record year for catastrophic losses, particularly in the wake of the Alberta and Toronto flood events (combined, both accounted for more than $2.5 billion in claims).

The pattern has been trending upward for the past decade and is well-documented. These losses are not going away; they are increasing and must be addressed.

This raises several pertinent questions: What are the most effective ways to minimize water damage? What role does this industry play – and what part should government take? And how long of a window is there to take real action?

FULL PARTNERSHIP ESSENTIAL

Multi-tiered approach

There is no silver bullet. Flood mitigation involves a multi-tiered response that encompasses homeowners, business and the insurance industry as a whole. It also requires a renewed commitment from all levels of government.

Certainly, the federal government, which pays 90% of disaster assistance after natural catastrophes, has a huge role in flood prevention. It is a key player in the disaster mitigation business, a reality that was tacitly acknowledged in the recent federal budget with the announcement of a $200-million fund for this purpose.

Importantly, the federal government is also responsible for standards set by the National Building Code of Canada 2010 (NBC).

The provinces have a big stake in the water damage game, as well. They share a portion of disaster assistance, a sum that has naturally ballooned with recent flood events. They also use the NBC as the basis for the practical application of provincial codes.

Moreover, provinces are responsible for funding significant infrastructure projects and overseeing municipal development standards.

Like many things, it is at the local level where ideas become actions. Flood risk is highly specific to certain locations based on geography. The best solutions are often tailored to local conditions. As such, certain municipal efforts to alleviate flood damage are encouraging.

LOCAL BENEFITS

Saskatoon is a good example. Municipal officials recognized that the city was dealing with higher annual precipitation rates. Since record-keeping began in 1911, four of the highest rainfall years have taken place from 2005 onwards (including 2010, the wettest year on record). There also has been an increase in severe rain events and, of course, localized flooding.

The city adopted a two-pronged approach that includes small-scale household solutions and larger infrastructure projects.

On the first, Saskatoon found that a combination of sump pits and backwater valves was 96% effective in reducing damage from sewer back-up.

The problem: not enough homes at risk had these in place. So the city subsidized at-risk homes to install a backwater valve and sump pump, and pays 100% of the costs up to $3,000.

On the second, Saskatoon developed “superpipes” – sanitary sewer-holding tanks designed to capture overflows during severe rain events. These large-diameter polyethylene pipes are located in neighbourhoods that have experienced severe or repeated basement flooding. They have proven to reduce the risk of private property water damage.

Windsor is another good case in point. The city experienced its wettest year on record in 2011, when 1,568 millimetres of rain fell (the average annual rainfall in the city is 844 mm).

This came one year after a massive rainstorm hit Windsor in June 2010, causing flooding in more than 2,200 basements.

City officials knew something had to be done in both the short and the long term to address the threat of water. The municipality is pursuing a substantial infrastructure program to separate combined sewers and complete priority 1 storm relief sewers at an estimated cost of $700 million to $900 million.

In the short term, Windsor’s planners identified seven key measures that would give the city the biggest bang for its reduction buck. These include programs ranging from a basement flood protection subsidy (similar to Saskatoon) to eavestrough downspout disconnection, flow monitoring and hydraulic modelling of the city sewer system.

There are other solid examples of cities addressing the threat of flooding, including Ottawa, Edmonton and Winnipeg.

Winnipeg recently announced completion of the $627-million Red River Floodway Expansion Project that improves flood protection for the residents of the city and surrounding areas from a 1-in-90 to a 1-in-700 year flood.

Other flood protection measures were announced in eight communities in Manitoba, including the city of Brandon.

These are concrete actions that are being taken today. They are also projects and ideas that are transferable and adaptable to cities across Canada.

These practical measures can, and should, be implemented quickly – it is a case of pay now, or pay later. Delays in implementing sound flood-mitigation measures invariably come back to haunt governments and citizens.

TIMELY RESPONSE CRITICAL

Look at the Alberta situation. The impact of the tragic flooding in June 2013 could have been dramatically reduced if recommendations from a 2006 government report had been adopted.

Then Alberta MLA George Groeneveld tabled the study after severe flooding hit the province in 2005. Included in the dozens of recommendations were calls to restrict housing development in flood plains and plans for better flood mapping in communities at risk.

Granted, governments have many competing priorities, and finding funding for infrastructure is not an easy or popular thing, but that report sat idle for years and was only officially released by the Alberta government in 2012.

Clearly, there is a price to pay for procrastination.

The insurance industry can nudge governments in the right direction. Aviva Canada is a strong supporter of the Institute for Catastrophic Loss Reduction, which crafted several specific recommendations for what Alberta (and other provinces) can do to reduce the impact of flooding.

The Insurance Bureau of Canada is also leading the discussion on adaptation to severe weather and climate change. Through these kinds of forums, the industry is pressing for practical results, such as improved flood risk mapping, which will benefit all Canadians.

BROKER INFLUENCE

Another key group is independent insurance brokers. They are on the front lines of consumer interaction and have a direct window into what is happening in their customers’ lives.

In the past, insurance brokers have influenced towns and cities to improve fire departments to reduce property damage and improve safety. Perhaps the same can be done for local flood risk measures. What actions are being taken at the municipal level to upgrade sewers or to encourage risk mitigation by homeowners?

Brokers can stay informed of actions from their provincial governments and ensure their local representatives remain committed to a long-term plan. What steps are being taken upstream to reduce flood risk in areas that affect their customers? If none, why? What is the timeline for action?

Brokers also have the opportunity to discuss water damage exposures with their customers, as more homeowners upgrade basement living space. Does the policy include adequate coverage and limits for the valu
e of a finished basement and its contents? Is the customer aware of loss-reduction steps (such as backwater valve, sump pump, lot grading and downspouts away from house) and municipal programs to subsidize risk mitigation measures?

As mentioned, there is no magic solution to reducing the risk communities face from flood and water damage. Loss reduction and mitigation will, instead, require an active partnership between consumers, brokers, insurers and key levels of government.

All groups must be committed to addressing a national problem with very specific regional implications.

Today, there is less room for talk and more opportunity for action. Some of these actions should involve restrictions on residential or business developments in flood-sensitive areas, incentives for homeowners to take direct steps to prepare for major flood events and investments in proven infrastructure loss reduction efforts.

Up-to-date, sophisticated flood risk mapping should underpin all of these measures as we move forward.

In the final analysis, floods clearly cannot be prevented. But there are many things that can be done to reduce water damage. The time for commitment is now.