RSA Canada CEO says poor construction standards are amplifying water losses

Published: October 28, 2017

Updated: July 24, 2018

Author: Luke Jones



Slacking construction standards combined with aging infrastructure are “major factors” in the challenges facing Canadian property insurance providers when handling water losses. The assessment was offered to brokers during the CEO Panel at the annual Insurance Brokers Association of Ontario convention.

“The issues we have both with overland water and water within homes is, I would say, a global phenomenon, particularly in the northern hemisphere,” said Martin Thompson, president and CEO of RSA Canada. “There are a couple of major factors. One is construction standards have fallen quite materially.”

The CEO Panel was part of the IBAO Convention at the Shaw Centre in Ottawa and was moderated by Jim Harris. He asked Thompson whether British company RSA sees difference in its water damage system in Canada and Europe:

“The quality of the products and the quality of the workmanship in construction today is nowhere near as high as it used to be and we see a lot of the products being used are not as good as they used to be, so I think that is one issue,” Thompson said. “The second challenge is, because we live in a post-industrial society, we have a very aged infrastructure almost across Canada.”

“Looking at our U.K. business, it’s the same issue and it’s very difficult and very expensive to manage stuff,” Thompson added.

In its U.K. market, the company works with the British government’s Flood Re, a program that was launched in 2016. Flood Re functions as a non-profit monoline reinsurance provider that is subsidized by tax paid by all home insurance companies in the country.

Through the program, the government provides a cross-subsidy from around 98% of all Britons to high-risk property owners.

The industry “had to lobby the government quite extensively almost to the point of the industry threatening to withdraw flood coverage in order that we could actually get them to start investing in flood defences,” Thompson said.

“It’s a very complicated issue,” Thompson claimed.

RSA Canada was among the first in the country, following Aviva Canada and The Co-operators) to launch a residential flood coverage solution. Launched in 2015, the protection protects RSA from sewer back-up wording and gives customers a dedicated product.