Canadian Underwriter

Canada needs national flood insurance initiative, experts say

October 3, 2014   by Greg Meckbach, Associate Editor

Print this page Share

Canadians need to “make a determination on a national flood insurance initiative” and Canada needs a program to build infrastructure to help reduce property insurance losses from flooding, speakers said Thursday at a seminar in Toronto.

“We need to launch a national infrastructure adaptation program to maintain the natural integrity of wet lands and related types of ecosystems in and around cities to de-risk the probability of flooding,” said Dr. Blair Feltmate, a professor with the University of Waterloo, Ontario’s School of Environment, Enterprise and Development. “We need to build adaptation into the building codes.”

Feltmate made his remarks October 2 at an annual seminar — titled Catastrophic Loss: Fires, Floods, Explosions — What’s Next, Locusts? held by The ARC Group Canada, a network of independent law firms across Canada.

Along with three other speakers, Feltmate was commenting on the sharp increase in recent years in insured losses, in Canada, from severe weather.

Some measures that could reduce the risk of flood to properties include permeable paving, maintaining wetlands and streams and building bioswales, which are essentially ditches with rocks and plants. This way, water would be stored and discharge more slowly, Feltmate explained.

Dr. Blair Feltmate“We can take a lot of risk out of the system very very cost effectively, for not a great deal of money,” Feltmate told attendees at the seminar.

Feltmate is co-author of a paper — titled Partners for Action: Priorities for Advancing Flood Resiliency in Canada — announced last month. The research — commissioned by The Co-operators Group Ltd. — was based both on a survey of property and casualty insurance executives, a survey about flood insurance of 18 stakeholders and a round table conducted last June.

During the ARC Group seminar, in reply to a question from an audience member, Feltmate suggested many key politicians are on board with the concept of adapting to the severe weather (such as more intense rainstorms and wildfires) he says will result from climate change.

“The Prime Minister understands this file quite well,” Feltmate said of Stephen Harper, whose riding, Calgary Southwest, was in the area hit by Alberta’s 2013 floods. “He’s not a big fan of a carbon tax, as you know, but he certainly understands adaptation, he gets it, he saw what the effects of flooding look like up close in his own riding, and right now, with the Privy Council Office and the material that’s being put in front of him, there’s a lot right now on adaptation that he’s looking at, and he wants to position this for the October, 2015 election.”

Liberal leader Justin Trudeau “also gets this file quite well,” as do several provincial premiers, Feltmate added.

“I think the stars are well aligned now to advance aggressively on adaptation for the country,” Feltmate said.

Paul Kovacs“We are very fearful that the evidence we are seeing about extreme rainfall is going to increase in intensity going forward,” said Paul Kovacs, founder and executive director of the Institute for Catastrophic Loss Reduction (ICLR), of climate research. “Wildfire intensity is going to increase going forward. We are worried about the wind although the trends are not as clear. Perhaps more tornadoes or large hurricanes could come.”

ICLR uses research from Western University’s Boundary Layer Wind Tunnel, the Insurance Research Lab for Better Homes (IRLBH) and the Wind Engineering, Energy and Environment Research Institute (WindEEE RI) in London, Ont.

“Some of our research is showing that we can have a structure that if hit by a Category 2 tornado or a Magnitude 3 hurricane — the strongest hurricane that we have ever had in this country, for example — and if designed properly, that building would have no damage, at least that’s what we are finding in the laboratory,” Kovacs said. “It’s not the way we are building today but we have been able to identify specific changes in how we build so that wind will not do damage.”

Greg LarochelleOntario is “quite an active environment for straight-line wind,” said Greg Larochelle, head of reinsurance placements and administration for RBC Insurance.

He presented several maps of Canadian cities displaying both areas with flood risk and locations of policyholders’ properties.

“Floodplain mapping is evolving and over time it will get better and more robust and we can obviously have better conversations with our insureds, going forward, to help them be better prepared,” Larochelle said.

However, the University of Waterloo research “suggests a fundamental lack of coordination between governments and private agencies responsible for flood map data,” Feltmate and Dr. Jason Thistlethwaite, director of the climate change adaptation project, wrote in their Partners for Action paper.

“Not only do we not have up-to-date flood plan maps that tell us where the water is going to go to today – because you need to know that – you want to make sure that you are not building in a place that might be flooded 25 or 50 years in the future,” Feltmate said Oct. 2 at the ARC Group seminar. “The big floods are still yet to come because the extreme in the weather is going to get more extreme.”

But lack of overland flood coverage is an issue in Canada for homeowners who assumed they were covered, Feltmate suggested.

“All of a sudden a storm occurs, the basement is flooded there’s three feet of water in the basement,” Feltmate said. “They call their insurance company up and the adjuster comes over and says, ‘I’m sorry but that water came in through the side window you’re not covered,’ that doesn’t go over very well.”

Martha TurnbullOne audience member asked Martha Turnbull, RBC Insurance’s head of home, travel and property claims, about the coverage issue.

“Overland flooding is something that is not covered by the current domestic home insurers,” said Turnbull. “It does speak to the need, for us as a nation, to make a determination on a national flood insurance initiative, and certainly that’s something that is definitely in the works and that we definitely need to look at.”

In order to advise homeowners on risk reduction measures, Canada should establish a “home adaptation audit program,” Feltmate said.

“A properly trained person can come into a house in an afternoon, look at about 100 points of reference and three hours later, walk out and hand to you a short list of recommendations that you need to embrace, maybe six things, that can lower the probability of basement flooding,” he said. “Most of the time the actions that will be identified on this short list can be deployed within hours for very little labour and very little cost.”

Examples i
nclude disconnecting downspouts and buying plastic covers for window wells, Feltmate added.

“There are very specific actions that can be taken to protect a home against these different perils, if the homeowner makes the investment, if the insurers provide the incentives by changing their rating and their pricing … if governments get involved, then we think we can have a lot more of these resilient homes,” Kovacs said.