Government continues to work with insurers on flood mitigation and protection

Published: October 12, 2017

Updated: July 24, 2018

Author: Luke Jones



Federal government knows there are major gaps in flood mitigation and protection in Canada and the insurance industry and government continue to work on finding a solution, said a speaker and the recent National Insurance Conference of Canada (NICC).

“There are ongoing discussions with senior officials responsible for emergency management to high level provincial and federal officials in the public safety realm,” reported Craig Stewart, vice president of federal affairs with the Insurance Bureau of Canada. “Where we do need improvement, however, is… how do we work better with realtors, with banks [and] ratings agencies to make this a broader discussion, so it’s not just governments and insurers, but others that have a stake in solving this?” Stewart asked.

Also speaking during the session was Joel Baker, president and CEO of MSA Research asked about the potential of a Flood Re-type pool. Stewart described it as a “tricky issue” but said a pool would be administered by insurers and would protect 7-10% of people in high-risk flood regions.

“Government wasn’t ready to proceed yet. They didn’t understand the nature of the problem and frankly, it took until these floods in the spring nationwide until this administration federally grasped that there was a real problem here that they needed to deal with,” Stewart said during the session titled Where Water Meets Underinsurance: Canadian Flood Risk – A Public Policy Imperative.

However, the federal government knows existing financial assistance models are “flawed in that they are backstopping the risk federally and they are not leading to the right market incentives for people to, even if they are aware of the risk, take action. Until the insurance offering matures further, they won’t trust the insurance industry to take that on,” Stewart added. “The second thing that we heard was they didn’t want to [replace] one flawed approach that delivered the wrong market signals with another flawed approach. Somehow we have to figure out a way that we are incenting the right behavior.”