Report highlights emerging insurance issues arising from climate change in Canada’s North

Pollution liability arising from permafrost degradation, climate change disclosure and risks associated with new shipping lanes are among the emerging insurance implications of climate change in Canada’s North, according to a report by the National Round Table on the Environment and the Economy (NRTEE).
The insurance section of NRTEE’s extensive report, True North: Adapting Infrastructure to Climate Change in Northern Canada, was written with a significant contribution from the Institute for Catastrophic Loss Reduction (ICLR).
Overall, the report concludes that infrastructure and communities in Canada’s North are unprepared to cope effectively with the looming threat that climate change poses to roads, buildings, industrial waste sites, energy and other critical infrastructure.
Section 5 of the report contains a passage on some emerging insurance issues arising from climate changes in Canada’s North.
For example, “permafrost degradation could contribute to increased exposure to liabilities linked to pollution,” the report reads.
“In communities with above-ground water and sewer systems, permafrost melting could rupture the systems causing widespread contamination.
“Owners of the water and sewer systems may be held liable for damage, cleanup costs, and for failure to upgrade existing infrastructure.
“Energy pipelines built over permafrost terrain could be at risk of pipeline rupture and leakage, with resulting contamination of land and possibly watercourses, and high cleanup costs.
“Abandoned and orphaned mining operations in Yukon and Northwest Territories with containment structures (e.g., tailing dams) reliant on frozen permafrost might be at risk of breaching and releasing toxic tailings.”
The report also notes that, consistent with international trends in corporate social responsibility, climate change disclosure is becoming more common.
“Companies that are affected by climate change but do not themselves contribute to it could be vulnerable to class action lawsuits if they do not make changes to avert negative impacts of climate change on their operations,” the report reads.
In addition, “use of new shipping lanes, including an open Northwest Passage, may raise issues of marine liability,” the report says. “For example, what would be the implications of a vessel carrying hazardous materials striking ice and releasing toxic materials?
“The cleanup of fuel alone in cold and distant waters would be both difficult and costly, while environmental and social impacts could be significant.”
And with increasing tourism activity in Canada’s North, “the risk of tour ships foundering may pose great challenges,” the report says. “Aside from potential liabilities, these include greater resources for rescue and evacuation efforts and the possibility of overwhelming the service capacity of small communities.”
The full report is available on the NRTEE Web site at www.nrtee-trnee.ca/true-north.