Federal proposals for residential flood insurance, disaster mitigation get kudos from Insurance Bureau

The federal government’s announcement Tuesday that it plans to consult with the industry for a “national approach to residential flood insurance” and to start funding projects such as flood control infrastructure in 2015, has been well received by the Insurance Bureau of Canada.

Finance Minister Jim Flaherty tabled the 2014-15 federal budget Feb. 11. In addition to spending plans for the upcoming fiscal year, Flaherty announced the ruling Conservatives plan to provided $200 million over five years, starting in 2015-16, to a National Disaster Mitigation Program.

“This program will support investments in structural mitigation measures, such as infrastructure to control floods that can reduce the impact of severe natural disasters,” the government stated in its budget documents.

The government also announced it “proposes to consult with the insurance industry, provinces and territories to explore options for a national approach to residential flood insurance.”

“This is the beginning of a process and we thank the Finance Minister and Public Safety Minister Steven Blaney for acknowledging the significance of these key public policy issues,” stated Don Forgeron, IBC’s president and chief executive officer, in a press release.

“As the insurance industry, we are concerned with adaptation issues and have invested extensively in helping Canadians. We want governments at all levels, the private sector, citizens and community groups to continue to come together on these critical files.”

In the budget document, the federal government noted that Canada “is the only G-8 country without residential flood insurance coverage,” adding the goverment “will consult with the insurance industry, provinces and territories, and other stakeholders to explore options for a national approach to residential flood insurance in Canada and insurance issues arising from natural disasters more generally.”

The proposed National Disaster Mitigation Program is intended to “support investments in structural mitigation measures, such as infrastructure to control floods that can reduce the impact of severe natural disasters.”

The federal government intends to share the costs of those projects with the provinces and territories.

“The Government will announce the details of the program over the coming months,” according to the budget document. “In addition to this new funding, disaster mitigation projects are also eligible for federal cost-sharing under the new Building Canada plan. The Government will also consult with provinces and territories on changes to the funding formula for the Disaster Financial Assistance Arrangements, which has not been updated since the program was introduced in 1970.”

Another proposal in the budget is to provide $11.4 million over five years to Natural Resources Canada to “upgrade the earthquake monitoring system to incorporate more advanced technologies that provide timely public alerts in high-risk and urban areas.”

In addition, the government is offering a four-year pilot insurance program covering cattle and hog producers in Western  Canada against unanticipated price declines.

“The four-year pilot Western Livestock Price Insurance Program is a unique and collaborative arrangement between the federal government and the Western provinces to enhance risk management options available to the livestock industry,” the government stated. “The program will be actuarially sound and self-sustaining, with premiums fully funded by producers.”