Why brokers may have fewer home flood wordings to choose from

The lack of standard wording for home overland flood insurance is not a bad thing, but Canadian brokers might soon have fewer wordings from which to choose, the head of Swiss Re Canada suggests.

Overland flood coverage was generally unavailable in Canada home insurance until 2015.  Now, depending on the insurer, there could be flood coverage for sewer backup, overland water, or ground water.

Today, different property insurers are offering different terms and conditions to Canadian homeowners, Swiss Re Canada CEO Veronica Scotti said Tuesday.

“We don’t want to go down a path where there is one cover and it is fixed for everyone,” Scotti said during a question and answer session with reporters after Swiss Re’s 33rd annual breakfast meeting in Toronto. “I think it’s important to give consumers choices.”

Even so, she predicts there could be fewer wordings available in the future.

“One possible outcome is we continue to see a proliferation of wordings,” she said. “Another possible outcome is that over time, there will be a natural demand and supply type of mechanism where those policies that seem to be fitting consumer needs best become a little bit more mainstream.”

Using ice cream as an analogy, Scotti said that just like some ice cream flavours turn out to sell better than others, some flood insurance wordings will be more popular than others. “It’s likely there will be technical discussion groups where [insurers] say ‘What wording seems to have worked the best and why?’”

There were subtle differences in policy wordings when insurers announced overland flood coverage in 2015.

For example, Aviva announced it covered “losses that result from the accumulation or run off of surface waters, including torrential rainfall, when water enters the property.”

RSA said it covered “fresh water flooding and damage that is also caused by eaves and downspouts and drains.”

The Co-operators, meanwhile, described its coverage as insuring loss or damage caused by: surface water; flood; discharging, backup up or overflow of water or sewage; rising of the water table; or water below the surface of the ground, including that which exerts pressure on or flows, seeps or leaks through any opening in a sidewalk, driveway, foundation, wall or floor.