Brokers and insurers must work together on flood insurance say industry leaders

Published: June 11, 2019

Updated: June 30, 2019

Author: Luke Jones

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2019 has brought another terrible spring flood season, with parts of Quebec, Ontario, and New Brunswick hit by significant overland flooding. Brokers have voiced their concerns about flood insurance availability across provinces.

Flood risk was a focus topic between the Insurance Brokers Association of Canada (IBAC) CEO Peter Braid and the Insurance Bureau of Canada (IBC) CEO Don Forgeron at the Insurance Brokers Association of Alberta’s (IBAA) 2019 convention.

Braid said flood is an area where the broker network can collaborate with insurance companies to bring as much flood insurance protection to as many customers as possible. However, he admits there is no consistency in the market, which frustrates brokers and confuses consumers.

“This issue represents another huge opportunity [for] IBC and broker associations to collaborate to ensure that Canadians are better served in terms of getting flood coverage, if they’re eligible,” said Braid. “There’s still some confusion [and] some frustration about the fact that flood products vary significantly between insurance carriers. Insurance carriers use different proprietary flood mapping software, so a house may be eligible with one carrier but not another, and after the devastating floods we’ve seen across the country in the last few weeks, this has to be a huge opportunity for us to better serve our communities, our consumers, and Canadians.”

Forgeron said inconsistency in the market is born from the governments mixed messages on flood insurance. He said several obstacles prevent direct communication of the situation to customers. For example, homeowners have short memories of previous events, while governments are not consistent in protecting communities.

“We do need to do things differently going forward, but we have a flood product now that five years ago we didn’t have,” he said. “You need to come up with ideas for that, and we’ve got to raise the level of awareness with Canadians, [though] there’s some excellent work being done at the national level [and] I do think we’re inching closer towards a national flood program.”

Flood insurance has been available in Canada since 2015, giving customers access to coverage protection against overland flooding. However, policies are not universal, and customers are often confused about what coverage one insurer offers compared to the next. Furthermore, many homeowners in high risk areas are still unable to purchase flood insurance.

Forgeron says Canada can look to other nations, such as Australia, for inspiration. In that market, the government turned over the creation of common definitions for flood insurance policies to insurance companies.

“There always will be competition, [and] there always should be competition. Companies want to differentiate themselves from their competitors – if they want to offer a better price, if they want to offer more coverage,” Forgeron told the audience. “It is a free market system, but there’s probably a box that the industry someday will play in.”