TORONTO, April 20 /CNW/ - The Institute for Catastrophic Loss Reduction
(ICLR) today announced the release of the French version of a
discussion paper titled "Making Flood Insurable for Canadian
Homeowners." The study outlines the steps and solutions to resolve the
problem of Canadian homeowners being unable to purchase insurance for
overland flood damages.
At present, homeowners in Canada cannot purchase overland flood
insurance and instead are left to rely on government-provided financial
assistance programs and/or on their own savings after flood events. The
report demonstrates flood insurance has many advantages over government
relief programs. Insurance companies already have well-established
methods for assessing and pricing risk, and for paying claims which can
result in a faster recovery. Risk based premiums and deductibles can
also provide incentives to encourage actions to reduce flood risk.
"Canada is the only G8 country where flood insurance is not available to
homeowners. With other forms of water-damage being covered, such as
sewer backup and burst pipes, and with commercial entities being able
to purchase flood insurance, the coverage void tends to confuse - even
anger - homeowners when they discover that they are not covered after a
flood event," said Paul Kovacs, executive director of the Institute for
Catastrophic Loss Reduction. Kovacs added: "The provision of flood
insurance for Canadian homeowners will put Canada in line with most
other industrialized countries, and end any confusion that exists with
regard to water-damage claims."
With the melting of a heavy snow pack in the U.S. midwest and Canadian
Prairies, the question of Canadian flood insurance is currently top of
mind for many residents of Manitoba and Saskatchewan as forecasters are
calling for spring floods on the Red and Assiniboine Rivers that could
rival those experienced in spring 1997. In recent months, residents of
New Brunswick have also experienced major flooding after heavy rains in
December 2010, and many Newfoundlanders experienced heavy flood damage
after Hurricane Igor hit the island in September 2010.
The paper supports a partnership between the insurance industry,
government and private homeowners. Additionally, it explores historical
flood damages in Canada, current flood management practices at the
national level in Canada and flood management practices for four case
study provinces: Ontario, Quebec, British Columbia and Alberta.
One of the biggest barriers to implementing flood insurance in the
Canadian market so far has been adverse-selection. What the report
demonstrates is how to overcome this barrier by bundling flood
insurance into homeowner insurance policies that cover other perils
such as fire or theft. The bundling approach has been in place in the
U.K. for the past fifty years and, as the findings of this report show,
is the best suited model for Canada.
For a viable flood insurance program in Canada, governments will need to
work to increase flood risk assessment and reduce flood risk. A viable
insurance program will also require that public relief programs do not
conflict with flood insurance.
Under the strategies proposed in the report, homeowners, meanwhile,
would need to be aware of their own flood risk and implement
appropriate flood damage mitigation measures on their own property.
Risk based premiums and deductibles would help ensure the higher risk
properties retain a greater proportion of the costs. To avoid ambiguity
when claims and payouts are made, the report also states that flood
insurance in Canada should cover all causes of flooding, including
The report concludes that the next step in establishing a successful
flood insurance program involves an insurance industry-wide discussion
of this important issue.
To learn more about the report, "Making Flood Insurable for Canadian
Homeowners," please visit www.iclr.org
* * * *
Established in 1998 by Canada's property and casualty insurers, ICLR is
an independent, not-for-profit research institute based in Toronto and
at the University of Western Ontario in London, Canada. ICLR is a
centre of excellence for disaster loss prevention research and
education. ICLR's research staff is internationally recognized for
pioneering work in a number of fields including wind and seismic
engineering, atmospheric sciences, water resources engineering and
economics. Multi-disciplined research is a foundation for ICLR's work
to build communities more resilient to disasters.
SOURCE Institute for Catastrophic Loss Reduction
For further information:
Glenn McGillivray, Managing Director, ICLR, tel. 416/364-8677, ext. 3216, cell 416/277-5827, fax 416/364-5889, firstname.lastname@example.org