No country flood insurance model is ready-made for Canada, but there are inspirations

Published: April 27, 2017

Updated: July 24, 2018

Author: Luke Jones



Canada is a tough market to implement a standardized flood program and no country can serve as a perfect template for Canada to adopt. However, speakers at the Insurance Bureau of Canada Financial Affairs Symposium say Canadian governments and insurers can learn from other countries to build a new solution.

For example, Britain’s Flood Re program is an “analogy for Canada” for areas of high-risk of flooding. However, the consensus amongst experts is that more research must be undertaken to assess how implementing a flood program would work.

Balz Grollimund, Swiss Reinsurance Company Ltd.’s head of treaty underwriting for Canada and English Caribbean, spoke at the symposium panel titled Natural Catastrophes and Climate Change Implications.

“I think one very good example is Flood Re in the U.K., where in the high-risk areas which are not insurable by the insurance industry itself, the government and insurance together create a pool,” Grollimund said told attendees of the Financial Affairs Symposium, held April 25 at the Design Exchange, the former Toronto Stock Exchange.

Flood Re has been running in the United Kingdom since August 2016. It is a specially created not-for-profit reinsurer that is subsidized by tax against all insurance providers that write home insurance. The program provides coverage to high-risk flood property owners.

With Flood Re, the program ensures “that where government allows to build in these areas, insurance is possible,” Grollimund said. “I think there is an analogy for Canada to be drawn as flood insurance has taken up a lot in the last couple of years.”

Canada has been slowly warming to overland flood coverage. Insurance companies started offering protection, among them The Co-operators, RSA, and Aviva Canada.

“Products are available from most insurance companies these days, excluding though the high risk flood zones, so I think that is a very specific area where insurance and government can partner up to design something to address the issue,” Grollimund said at the symposium.

While Mazdak Moini, Aviva Canada’s vice president of commercial lines and reinsurance, praised the IBC for looking away from Canada for inspiration, he says there is no specific template that be lifted into the country.

“No model is perfect, wherever in the world you look,” said Moini, another panellist on the Natural Catastrophes and Climate Change Implications panel. “There isn’t something that is a lift and shift directly to Canada.”