Oct. 6, 2025 — Canada needs to rethink how it manages flood risk, according to a pair of researchers from the University of Waterloo who say the use of insurance alone cannot stem the rising costs of damages.

In an opinion piece originally published in The Hill Times and posted to the school’s website, Jason Thistlethwaite, professor in the school of environment, enterprise and development, and Daniel Henstra, professor of political science, have argued that Ottawa should create a Canadian community rating system to complement a planned national flood insurance program.

Such a system, they say, would reward municipalities that adopt local protections with lower premiums for their residents.

“Flooding is already Canada’s most costly natural hazard and the threat is only growing,” the researchers said.

The federal government is working on a new flood insurance program to provide coverage for high-risk homes but the researchers said this won’t be enough on its own.

“Unless communities take steps to reduce their exposure, costs will only escalate. That’s where a Canadian Community Rating System comes in,” the authors said.

They warned that the cycle known as ‘flood-rebuild-and-repeat’ is unsustainable.

One in 10 Canadian homes sits in a high-risk flood zone, accounting for up to 90% of annual residential damages that amount to between $1.4bn and $3bn.

However, surveys show more than 90% of residents in these areas do not realize they are at risk and many lack insurance altogether because coverage is unavailable or prohibitively expensive.

“A Canadian community rating system would help break the cycle of flood, rebuild and repeat,” Mr. Thistlethwaite and Mr. Henstra wrote.

“By tying financial savings to real reductions in risk, it creates lasting incentives for communities to make better choices. It would also make the federal insurance program more sustainable by easing pressure on public funds.”

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