Insurance companies have often called for the federal government to step into the overland flood insurance market and create standards for coverage. Private insurers have been offering coverage since 2015, but there are gaps in the market. Speaking to Canadian Underwriter, one industry executive believes minimum coverage standards should be created for overland flood protection.
Alain Thibault, chairman, president and CEO of the Canadian Association of Direct Relationship Insurers (CADRI), wants to see a standard created to unify the flood market at a base level.
“I’m glad to see that companies are starting to offer [overland flood] coverage, because three or four years ago, that was not even in the plan,” said Thibault. He will be offering his perspective on overland flood protection when he speaks as a panelist at CatIQ’s Canadian Catastrophe Conference (C4) in Ottawa from Jan. 31 to Feb. 2, 2018.
“Perhaps the weakness of such a competitive market is that if a company wants to bring flood to market, they can do it relatively quickly, but then everybody does their own thing,” Thibault told Canadian Underwriter in an interview. “It’s certainly confusing to brokers, and it’s confusing, I can imagine, to a client that does not know insurance. I’m torn, because it’s good that it’s moving, but are we [as an industry] where we should be? Probably not. Do we need more cohesion? I, for one — and this may not be shared by everyone — believe that we do.”
However, while many have called on the government to create standards, Thibault does not necessarily believe public intervention is needed. He thinks the private companies can create the universal coverage.
“I’m hoping that the market will be such that it will impose minimum standards,” Thibault said. The Insurance Bureau of Canada (IBC) has previously warned brokers to study the diversifying overland flood market to better help customers understand what is available. However, brokers could decline to work with an insurer if minimum standards are not offered in a policy.
“Companies will react to competitive pressures and will adjust accordingly,” added Thibault. “It’s not necessarily a fast process, but it will happen over time.”