Insurance companies not responsible for flood management

Published: May 31, 2017

Updated: July 24, 2018

Author: Luke Jones



Canada is in the midst of a debate to decide how to manage flood responsibility in the country. While most expect the government to take the lead in developing flood protection strategies, the insurance industry will also play a vital role. However, it is not the responsibility of insurance providers to manage flood risk, according to Suzanne Michaud VP at CAA-Quebec.

Overland flooding is the most common cat insurance loss in Canada and the rate of floods will continue according to data from the Insurance Bureau of Canada. It is still standard practise to build homes on flood plains along rivers and lakes. Quebec has recently stopped this kind of building, but current homes are still at risk.

“We have a river in an area called Beauce(-Sartigan Regional County), and every two or three years the river decides to overflow,” Michaud said. “It’s almost like a tradition – people plan parties around it. I don’t think any insurer will be willing to offer flood insurance protection there, but I’m not sure the broker or the insurer should be the one to do this job. The government, the municipality could.”

There have been widespread calls for Canadian provinces to make flood zone maps public. Quebec Premier Philippe Couillard has been one of the most high-profile advocates of public maps. However, most regions have ignored the calls, citing the possibility of house prices in flood zones plummeting.

“A broker can do the same thing as anybody who owns a house – they can look online and look at flood zones,” Michaud said. “They can say ‘oh, someone is phoning me from a flood zone area’ and they can give them advice like: it’s not a good idea to redo your basement with a wood floor because the flood endorsement protection is not available.”

“Somebody should advise the homebuyers, ‘oh, by the way, you’re in a flood area’,” Michaud commented. “They should be advised not to occupy the basement like the third floor or second floor.”