Feds announce release of report on national flood insurance

By Terry Davidson

Law360 Canada (August 30, 2022, 2:50 PM EDT) -- Ottawa has released a task force’s report on a national insurance program for flooding, which includes considerations for the “potential strategic relocation” of those most at risk.

According to an Aug. 30 news release, the report, Adapting to Rising Flood Risk: An analysis of Insurance solutions for Canada, was published by the Task Force on Flood Insurance and Relocation.

“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,” states the release. “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 modelling, and actuarial analysis, and demonstrates climate change adaptation in action.”

Flooding, it states, is the “most common and costly natural disaster, causing approximately $1.5 billion in damage to households, property, and infrastructure” per year — with homeowners having to take on around 75 per cent of the repair costs.

The federal government calls the report a “valuable first step” in reducing the impact of flooding, and that it “demonstrates climate change adaptation in action.”

“The government … is reviewing the report to inform next steps on the development of a national flood insurance program,” the release goes on to state. “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.”

It also notes the ongoing development of the country’s first National Adaptation Strategy (NAS) “to help Canada be more resilient and prepare for the impacts of climate change.”

Minister of Emergency Preparedness Bill Blair

Minister of Emergency Preparedness Bill Blair

The NAS, which is being developed along with provincial, territorial, municipal and Indigenous governments, is set to launch by the end of this year.

“I thank the [task force] … for [its] vital report, which will provide us with the insights and information we need to move forward on making flood insurance available and affordable for Canadians living in high-risk areas,” said Minister of Emergency Preparedness Bill Blair in a statement. “Developing a national flood insurance program is a priority for our government, and we will continue working with partners to give Canadians the financial protection they need.”

Craig Stewart, vice-president of climate change and federal issues with the Insurance Bureau of Canada said insurers “are eager to support” the program and look forward “to translating [the report’s] research into a program capable of offering flood insurance to hundreds of thousands of high risk Canadians.”

“The insurance industry is on the front lines, addressing the financial risk of climate change,” stated Stewart. “Insurance claims from intensifying severe weather have more than quadrupled over the past 15 years. Flooding is the most widespread climate peril facing Canadians today and those at high risk cannot be affordably insured. The government of Canada has shown essential leadership in appointing the Task Force and co-ordinating its work to conclusion.”

The report talks of the sensitivity and complexity involved with home relocation, and of the degree of choices an at-risk homeowner would have in whether to accept a buyout. Also, it states, if there is a place for mandatory buyouts, “their use should be limited and justified by the severity of the flood risk.”

“Furthermore, the timeline homeowners are given to make their decision should be appropriate and flexible to reflect the significance and weight of the decision that comes with leaving a home,” it states.

Relocating, it states, can “be a powerful risk reduction tool” in that relocating “the highest risk and repetitive loss properties removes risk rather than transferring or mitigating it.”

Still, consideration would have to be given to “areas already experiencing a shortage of available and affordable housing.”

With this, it calls relocation a “highly complex” option which could have “major impacts on households and communities,” including Indigenous communities “with strong ties to their ancestral, traditional land.”

The report’s release comes less than a year after intense flooding ravaged parts of British Columbia.

In November 2021, floods in Canada’s westernmost province destroyed homes and farms and damaged roads and bridges. It also led to the death of at least five people. The flooding resulted in B.C.’s government quickly declaring a provincial state of emergency.

In June, the Insurance Bureau of Canada reportedly estimated that B.C.’s flooding resulted in around $675 million in insurable damage alone.

If you have any information, story ideas or news tips for The Lawyer’s Daily, please contact Terry Davidson at t.davidson@lexisnexis.ca or call 905-415-5899.