Insurance industry continues to call on federal government to move forward with commitment to a national flood insurance program
An atmospheric river that led to intense flooding along the southern British Columbia coastline in October has resulted in over $110 million in insured damage, according to initial estimates from Catastrophe Indices and Quantification Inc. (CatIQ).
The Category 4 atmospheric river on October 18 to 20, 2024 caused significant flood damage to properties in Coquitlam, Burnaby, West Vancouver, North Vancouver, Metro Vancouver and Surrey. The intense rainfall and strong wind gusts resulted in rivers overflowing and multiple instances of sewer backups, as well as flooded basements, roads and parking garages. Also, a local state of emergency was declared for North Vancouver on the evening of October 20.
“Damaged property can be repaired or replaced, however our thoughts continue to be with the families and friends who lost loved ones as a result of this storm,” said Aaron Sutherland, Vice-President, Pacific and Western, Insurance Bureau of Canada (IBC). “Over the past few weeks, insurers have been on the ground working to assist their customers in the recovery process following this latest flood event. Reconstruction will take time, and insurers will be there every step of the way.”
While residential flood insurance is widely available in the communities impacted by this event, it remains limited – and may be unavailable – for properties at highest risk of flooding. As a result, uninsured residential properties that suffered damage may be forced to rely on government disaster financial assistance, if available, for their recovery. Today, roughly 10% of Canadian households cannot access flood insurance and the financial protection it provides. That’s why Canada’s insurers have called on the federal government to fully fund the National Flood Insurance Program that would ensure all Canadians have access to financial protection from flood risk.
“While insurers will be paying out millions of dollars in claims for this event, we expect total losses to be far higher due to the number of uninsured properties, as well as damage to public infrastructure,” said Jason Clark, National Director, Climate Change Advocacy, IBC. “Current government disaster relief programs serve as a last line of support for people who are uninsured or underinsured. They do not provide the same level of financial protection as insurance, and its taxpayers that ultimately fund relief payments. That’s why for nearly a decade, IBC and its members have been calling on governments to take action to adapt to Canada’s changing climate and to move forward on the creation of a National Flood Insurance program to better protect homeowners from the risks they face.”
A National Flood Insurance Program that would provide financial protection to high-risk households, while reducing disaster costs to federal and provincial government treasuries. Rather than responding with disaster financial assistance in the aftermath of catastrophes, this program would be a proactive, cost-effective approach to managing the financial toll when disasters strike. While the federal government has committed to its creation, the program has yet to be fully funded.
“With climate change increasing the frequency and severity of disaster events, Canada needs to reduce the number of families and communities that are being impacted by disasters, as well as enable better prevention, response and recovery from these catastrophic events,” added Clark. “In June 2023, the federal government launched an impressive National Adaptation Strategy, but little progress has been made by all orders of government towards achieving its targets for risk reduction. As costs mount from climate-fueled disasters, Canada needs to get ready for the next disaster. This is not the time for finger pointing. This is the time for governments and the private sector to work together to better protect Canadians and our communities.”
Insured losses related to severe weather in Canada now routinely exceed $3 billion annually and have already set a new record this year, reaching over $7.7 billion. By comparison, between 2001 and 2010, Canadian insurers paid out, on average, $701 million a year in claims related to severe weather.
Insured losses due to catastrophic weather are increasing
As IBC recently reported, Canada’s home, auto and business insurers are continuing to grapple with the most challenging year on record for damage from severe weather events and natural disasters. This summer alone, flooding in Toronto, other parts of southern Ontario and regions of Quebec, the Jasper wildfire and the Calgary hailstorm, resulted in approximately 228,000 insurance claims. By comparison, last year, Canadians made 160,000 claims for the entire year amidst record-breaking floods and wildfires across the country.
Here is a breakdown of insured losses for five major catastrophic weather events of summer 2024:
July flooding in Toronto and other parts of southern Ontario: $940 million
August flooding in GTA and parts of southern Ontario: $100 million
The amounts of insured damage are estimates provided by CatIQ (www.CatIQ.com) under licence to IBC.
Questions about a claim?
Consumers with questions about their claim are encouraged to contact their insurance representative. For general insurance inquires, consumers can contact IBC’s Consumer Information Centre at 1-844-2ask-IBC (1-844-227-5422).
