Canadian Underwriter

Insurance Brokers Association of Canada prepared to share flood principles document in November

October 26, 2015   by Greg Meckbach, Associate Editor

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The Insurance Brokers Association of Canada will be “prepared” next month to share a flood principles document, approved in Quebec City at IBAC’s meeting last month, the association’s president told Ontario brokers recently.

“We learned that flood maps in Canada need to be greatly improved,” said IBAC President Lorne Perry

During the annual members’ general meeting of the Insurance Brokers Association of Ontario (IBAO), IBAC President Lorne Perry noted that an IBAC task force studying overland flood and water damage held three meetings.

“We learned about flood insurance in other countries,” Perry said at meeting Wednesday at the Sheraton Centre in Toronto, where he was a guest speaker. “We learned that flood maps in Canada need to be greatly improved. We learned that the storms bring greater rain intensity than they ever have, and we also learned that mitigation discussions with clients is good for both brokers and consumers.”

The meeting was held during IBAO’s annual convention, held Oct. 21 through 23.

IBAC’s flood principles document was developed by a task force chaired by Perry, a former president of the Insurance Brokers Association of British Columbia who currently works out of Port Moody as manager or partner of five offices of InsureBC, a group of brokerages formerly known as The Intercity Group. Perry told Canadian Underwriter last summer that in its flood principles document, IBAC proposes principles “that we are looking at, going forward, as to what we think the industry and government should be doing when it comes to the concerns with flood and flood insurance.”

Last summer, IBAC was invited by the federal government “to join with a number of different stakeholders including insurers, engineers, people from Ducks Unlimited,” to a two-day meeting in early November, Perry said Wednesday at the IBAO convention.

“We will be prepared then to share our flood principles document,” Perry added.

IBAC’s task force was established “to look at what we can do to help be advocates for the consumers on this issue,” Perry (pictured below) told Canadian Underwriter earlier.

Until this past May, there was generally no coverage, for Canadian residential property owners, for overland flooding resulting in water entering a home.

That was when Aviva Canada Inc. launched an endorsement – initially announced in February – on residential property insurance policies covering “losses that result from the accumulation or run off of surface waters, including torrential rainfall when water enters the property.”

Also in May, The Co-operators Group Ltd. announced it would cover, in Alberta, flooding caused by an overflow from a body of water, sewer/water backup and accumulation of surface water caused by heavy rain.

Intact Insurance plans to launch a “revised property product” in 2016, Intact President Jean-Francois Blais said Thursday at the IBAO Convention. With a base policy and two additional endorsements, Intact customers will be able to “buy all the water coverage” that they need and which “exists out there in some way or some form,” Blais suggested during the CEO Panel, at theIBAO Convention.

Aviva’s endorsement forms “a key part” of the carrier’s water protection package, “which combines base policy water protection (broken water pipes and more), sewer back-up protection (the backing up or escape of water or sewage) and overland water protection (from water entering the property),” Aviva stated in February.

RSA Canada’s senior vice president for personal lines, Donna Ince, referred in March to Aviva’s announcement during a presentation and reception to RSA Canada brokers in Toronto.

“We are assessing what this means,” Ince said at the time. “We have to look at the insurance cost and definitely look at our data around flood mapping and we recognize that we will potentially be looking at how those coverages work today. There’s more to come on that in the coming months.”

Aviva said in February its endorsement will be “available as an endorsement to personal property insurance policies that have sewer back-up protection in place.”

Personal lines brokers will not want to risk errors and omissions exposure “by not offering flood cover when it is available” to residential property clients, suggested Joel Baker, president and CEO of MSA Research Inc., in MSA’s quarterly outlook report for Q1 2015, released last summer.

“With more announcements sure to follow, those that sit on the sidelines risk losing market share,” Baker wrote in the report, referrring to the announcements from Aviva and The Co-operators.

New overland flood products in Canada “will likely not deal with all of the high-risk properties and for that we believe we need government involvement,” said Don Forgeron, chief executive officer of Insurance Bureau of Canada, at the National Insurance Conference of Canada (NICC) Oct. 1.

Government involvement “should be focused on pre-planning instead of after the fact financial support,” Forgeron said at NICC, produced by MSA Research Inc. and held in Montreal Sept. 30 through Oct. 2. Forgeron made his remarks while moderating a panel comprised of two speakers.

One of those speakers was Brendan McCafferty, chief executive officer of Flood Re, a reinsurer and special purpose vehicle setup by the British government. Flood Re is scheduled to launch next April and will impose a special levy of 180 million pounds per year in order to subsidize flood insurance for high-risk properties.Lorne Perry, president of the Insurance Brokers Association of Canada, was a guest speaker at the annual members’ meeting of the Insurance Brokers Association of Ontario

In the United States, the 47-year-old National Flood Insurance Program (NFIP) subsidizes premiums in some cases. Coverage is written by the private sector but rates do not differ between carriers and agents. In order to qualify for NFIP coverage, a property must be in a community that has joined the NFIP and agrees to enforce sound floodplain management standards.

Lorne Perry (pictured right), president of the Insurance Brokers Association of Canada, was a guest speaker at the annual members’ meeting of the Insurance Brokers Association of Ontario.

IBAC “got some overview of some of the different programs that are out there,” Perry told Canadian Underwriter in August. “Whether or not we think that one is better than the other – I don’t think we are ready to make that decision.”

At NICC Oct. 1, Forgeron said “there is no single correct answer, and certainly no flood insurance model elsewhere in the world that can serve as an off-the shelf solution for us here in Canada.”

The “greatest riddle in any flood program is determining how to handle the highest risk properties,” Forgeron said at the time. “How do you strike a balance between the integrity of risk-based pricing while still protecting the most vulnerable home owners?”

More coverage of the IBAO Convention 2015

Intact Insurance to launch revised water peril product in 2016

Toronto Insurance Conference approaching IBAC on declaration of emergency endorsement

IBAO CEO Panel speakers call for more choice for Ontario consumers in auto insurance

Technology transforming insurance, broker channel, IBAO Convention hears

Travelers Canada ‘trying to figure out how best to proceed’ with telematics-based auto insurance

IBAO continues efforts to maintain restrictions on banks selling insurance

RIBO CEO, IBAO graduating CAIB class among those honoured at 2015 convention in Toronto

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