Why the B.C. floods had less insured damages than the Calgary flood

British Columbia suffered its worst flood in the province’s history in late 2021, causing approximately $450 million in insured damages, according to estimates by Catastrophe Indices and Quantification Inc. (CatIQ).  

Still, the insured damages pale in comparison to Canada’s costliest flood, which happened in Alberta in 2013. The Calgary flood cost insurers an estimated $1.8 billion in insured damages and about $5 billion in total damages. 

The B.C. flood estimate is only 25% of the insured damages done in Calgary’s flood. Why the discrepancy?

Rob de Pruis, director of consumer and industry relations at Insurance Bureau of Canada (IBC), explained the reason is in part due to the damage being done in un- or underinsured areas such as farmland, floodplains, and sparsely populated areas — or in areas covered by government funding.  

The damage estimate is bound to get larger over time, de Pruis said. “The total damage is likely going to be in the billions, but that has not yet been quantified. We know that the insurance industry will be paying out our preliminary estimate: $450 million.” That amount was later updated to $515 million.

But insurers may not be bearing as much of the load as in the Calgary flooding. Much of the land inundated by the recent floods in B.C. was agricultural farmland. And private insurance companies covered fewer damaged properties in comparison to the Alberta floods.   

“Crop insurance is provided by the government…as well as things like fixing the bridges and the roadways,” de Pruis said. “That infrastructure is covered by the government, not covered by private insurance.” 

Comparatively, the Calgary floods of 2013 impacted downtown urban areas and surrounding residential areas. Many commercial buildings — perhaps most notably, the Scotiabank Saddledome — were affected.  

“For some of these commercial structures, like the Saddledome, you could be literally losing millions of dollars a day in revenue, because you’re not able to use some of these facilities or you’re not able to conduct your business,” de Pruis said of the commercial impact.  

Another factor contributing to the relatively low insured damages figure in B.C. is that residential overland flood coverage is comparatively new. It only became available for the marketplace in 2015, spurred by the Calgary floods.   

“This coverage has only been around for about six years or so—it’s still a fairly new product,” said de Pruis. “Because it’s fairly new, [across Canada] only about half of policyholders have actually added on this endorsement to their insurance policy.”  

This figure remains true in British Columbia, with roughly half of British Columbians having flood coverage in their home insurance policy.  

And so while overland flood coverage is now available, not every homeowner or property owner has purchased it. De Pruis said many policyholders have misperceptions of their own flood risk.  

“If you don’t live by a river or a creek, many people really don’t understand their true flood risk. But we do know that even though you don’t live right beside a lake or a river or stream or creek, you still can be impacted by flood damage.”  

The flood loss estimates in B.C. don’t take into account the damage done in floodplain areas, which are high-risk areas that are often uninsurable. “When you’re living in a floodplain, it’s not a matter of if you’re going to be flooded, it’s a matter of when,” de Pruis said.  

5% of B.C. homeowners are unable to purchase flood insurance because they live in a high-risk area, IBC reported in November.  

“Even though around half of British Columbians have access to this coverage, in these particular floodplain areas, we would expect that coverage availability to be significantly less than that provincial average just because of that flood risk,” de Pruis said.  

Due to this, de Pruis said many homeowners “were not able to purchase insurance, or they were not able to purchase sufficient limits to cover all of their damages.” 

To address this gap in flood coverage nationally, IBC is working with the federal government on their flood insurance task force, which aims to develop a program where all Canadians — regardless of their risk levels — can have access to flood insurance.  

The goal, especially for high-risk flood areas, is “to develop some type of a mechanism or pool to really draw from to be paying out these claims,” said de Pruis. “We need to work on a public-private partnership model… 

“It’s about trying to understand what that could look like, and how we could develop some type of a program that’s long-term sustainable, to provide every Canadian with access to this flood insurance coverage.”  

Feature image: Damage caused by heavy rains and mudslides earlier in the week is pictured along the Coquihalla Highway near Hope, B.C., Thursday, November 18, 2021. THE CANADIAN PRESS/Jonathan Hayward