June 4, 2024 — THE FEDERAL government’s plan to introduce a flood insurance program for high-risk properties next year might be a bit too optimistic, says Graham Little, the Insurance Bureau of Canada’s Atlantic government relations VP.

When can Canadians expect the coverage?

“Timewise, we need it yesterday,” Little said during the Insurance Institute of Canada’s annual Atlantic symposium in Halifax last month. “That’s the honest answer. Realistically, I think it will take 18 to 24 months to set this up. So, by 2026, hopefully, but that will depend on continued funding and input by the federal government to make this a reality.”

Mr. Little noted that the bureau has been working with the government to develop a national flood insurance program for several years because roughly 1.5 million Canadians currently reside in high-risk areas.

“What (a national program) does is it allows people in high-risk areas to purchase a flood insurance product through the regular market that is backstopped by the federal government.”

He said the program will be delivered 100% through the regular insurance industry.

“The regular customer wouldn’t even know,” Mr. Little said. “It would just be seamless.”

He said the need for a national program is becoming more urgent as losses from severe weather continue to escalate.

“From 1983 to 2000, we had an average of $440m annually in claims,” he said. “Then, between 2001 and 2010, we see $675m. Between 2011 and 2020, things get considerably different. Now we’re talking $2.3bn a year on average. In 2023 — these numbers will be finalized sometime in the next couple of months — we had over $3bn in losses.”

Mr. Little said it is important to note that these are insured losses only. The totals do not account for uninsured, possibly municipal, property that would fall outside the realm captured in catastrophe loss tallies.

“These numbers are staggering,” he said.

He said that in the past, large catastrophe claims in any given year were more often than not due to one or perhaps two large meteorological events, such as hurricanes, ice storms, and blizzards. But that is no longer the case.

“Now, some of these are happening all of the time,” Mr. Little said.

And they are no longer tied to a large event or even easily modeled events.

More often these losses are the result of water events.

“From 1984 to 1993, 27 catastrophic loss events were water-related,” he said. “From 2014 to 2023, we see 127 catastrophes in total, 40 of which were water-related.”

Mr. Little said flood coverage is not only prohibitive for some people living in high-risk areas — it may not be available at all.

“Insured damage doesn’t speak to the number of folks that had damage that was uninsured, or they were unable to get insurance for their property.”

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