The Canadian government has announced the release of the interdisciplinary Task Force on Flood Insurance and Relocation’s report Adapting to Rising Flood Risk: An Analysis of Insurance Solutions for Canada.
In Canada, flooding is the most common and costly natural disaster, causing costly damage to households, property, and infrastructure annually, with residential property owners bearing approximately 75% of uninsured losses each year.
The report provides evidence and information required to support decision-making and a way forward on a national flood insurance program, with special considerations for potential strategic relocation of those at most risk. It is a valuable first step toward the common goal of reducing the impact of flooding for all Canadians and includes significant progress on flood modeling, and actuarial analysis, and demonstrates climate change adaptation in action.
Canada is reviewing the report to inform next steps on the development of a national flood insurance program. Work is also underway on the Flood Hazard Identification and Mapping Program and a flood risk portal to make flood risk information more accessible to Canadians.
Alongside provincial, territorial, Indigenous and municipal governments, the federal government is currently developing the country’s first National Adaptation Strategy, to help Canada be more resilient and prepare for the impacts of climate change. The National Adaptation Strategy is set to launch by the end of 2022. Strengthening Canada’s resilience to flooding and other disasters is one of the five focus areas of the Strategy.
“As we prepare for the increased impacts of climate change such as flooding, our government is proactively taking steps to ensure communities are better supported and protected,” said Steven Guilbeault, Minister of Environment and Climate Change. “A national flood insurance program is a concrete example of the kind of actions that will support the implementation of the National Adaptation Strategy that will help Canadians and communities be better prepared for climate change.”
The report notes that the total residential flood risk in Canada is estimated at $2.9 billion per year, which is markedly higher than previous estimates. This amount includes the effects of larger ‘tail risk’ events and reflects more accurate estimations of a number of residences and predicted damages (based on 2020 data). The vast majority of risk is concentrated in a small number of the highest risk homes. Of the $2.9 billion, 89.3% is concentrated in the top 10% highest risk homes. 34.1% is concentrated in the top 1% of highest risk homes.
The Task Force says some standardization is needed in the market. “Moving towards clear and standardized language in flood insurance reduces confusion about coverage and allows for a more informed choice for homeowners,” the report states. “Making flood coverage more comprehensive and seamless through bundling of flood insurance products is likely to streamline the claim process, improving both financial and mental health outcomes post-flood. Furthermore, ensuring that Canadians are not left underinsured for their risk is an important consideration for the design of any insurance model.”
And the report adds that a carefully designed flood insurance solution can ensure better protection for Canadians, help to share the costs more broadly, and provide incentive for risk reduction. “Without support for socio-economically disadvantaged groups, any program where insurance is optional will likely exacerbate their exclusion and marginalization,” the report continues. “For mandatory insurance models, consideration must be given to individuals and communities for whom insurance may not be an appropriate solution (e.g., due to differing home/land ownership arrangements, or for those living in significant poverty). Moreover, targeting affordability measures where needed most can be complex, and considerations of feasibility should factor into model design.”
The Task Force says the cultural connections of Indigenous peoples to water and land must be respected and that further engagement with and learning from Indigenous communities, governments, organizations and individuals, including in the form of healing and sharing circles, would help to ensure that initiatives are informed by Indigenous voices.