Flooding leapfrogs fire damage as leading cause of home insurance payouts, according to IBC
Perhaps its just the result of an uncharacteristically rough few years or perhaps it's an indication that the tide has truly turned; but in any event, the Insurance Bureau of Canada (IBC) has declared that flooding has officially surpassed fire damage as the leading cause of home insurance payouts in the country.
According to the IBC, the majority of the shift in payout capital has taken place in the recent past—relatively speaking. In the 25 years prior to 2009, damages and claims caused by weather events—which largely consisted of flooding—cost the insurance industry an average of $100-million a year. Since then, that number has effectively quadrupled; it now sits at approximately $400-million annually.
That's a similar figure to what the federal government contributes as well for flood damage and relief. Its Disaster Financial Assistance Arrangements program reimburses provinces after natural disasters, and between 2005 and 2014, it paid out an average of $410-million per year. Over the next five years, that number is expected to rise to $673-million.
These staggering increases beg the question, what has been driving up the volume in costs? IBC director of consumer and industry relations Pete Karageorgos believes it has to do with both an aging water and sewer infrastructure and the increase in storms brought on by climate change.
For those reasons, he and the IBC have prioritized dealing with severe weather conditions and have called on governments at both the federal and provincial levels to help build a national flood program that could better combat the threats posed by flooding and fortify the existing vulnerabilities in the national water protection infrastructure.
Part of what makes the need for change so pressing is that approximately 10 per cent of Canadian homeowners are living on a floodplain where overland flood insurance—a premium type of insurance that is highly necessary for people in high-risk areas, but also highly expensive and difficult to get. If Canada is to reduce the strain on homeowners, insurers, and the government when disasters strike, then it will need to improve the country's infrastructure and adapt to a more flood-heavy reality.