By: Luke Jones, Published on June 5, 2018 05:32 PM, Last Update on June 5, 2018 02:33 PM
The idea of government-backed overland flood coverage has long been mooted as necessary in Canada. According to an Insurance Bureau of Canada (IBC) official, the government in Ottawa is now considering a flood insurance system.
Such an implementation would be based on the UK’s Flood Re program, which has been deemed successful. IBC vice president of federal affairs Craig Stewart said that Federal Public Safety Minister Ralph Goodale has “asked IBC to lead a working that will deliver recommendations by November” on insuring Canadian homes in areas of high risk.
Flood Re was introduced in the United Kingdom in 2016, acting as a reinsurance company that is propped up by a tax placed on all insurance companies that write home insurance in the country. Through this system, 98% of the UK population subsidizes the 2% who live in high-risk properties.
The federal government wants to follow a similar model and “is taking a hard look at Flood Re in particular and has asked IBC to come up with options that include Flood Re or a model similar to Flood Re,” Stewart added.
Of course, Canadians already have access to overland flood insurance from private carriers. Such coverage has been available from companies like the Co-operators and Aviva Canada since 2015. However, many homeowners in high risk areas are unable to get the policies sold by private carriers.
“Windsor, Ontario is a classic example of a community that floods regularly and where insurers frankly have difficulty offering products,” Stewart added.