The Ontario Broker - Volume 23, Issue 1 - 35

MANAGEMENT: TACKLING THE INSURANCE GAP
INDUSTRY & MARKETS
FLOODING AND NATURAL DISASTER
Thomas Gendron, Director, Government Relations & Strategy, Impact Public Affairs
N
atural disasters are a significant problem for many regions
of Ontario, and the frequency of occurrences is increasing
year over year. Last year, 25 communities across the
province were forced to declare a state of emergency due
to flooding causing a significant risk to homes, businesses,
and infrastructure, according to the Government of Ontario. Floods-the
costliest natural disaster in terms of property damage-can be caused by
commonplace occurrences such as melting snow and ice, high lake or river
levels, heavy rains, and thunderstorms. Despite the frequency and threat to
hundreds of municipalities, many Ontarians lack the coverage necessary to
weather a sudden natural disaster financially.
Nationally, flooding causes approximately $1.5 billion in damages to
households, property, and infrastructure annually. Unfortunately, $800
million (53%) of this amount is entirely uninsured loss, and residential
property owners bear an estimated 75% of these costs. The obvious
question is why wouldn't a homeowner living in a flood-prone area have
coverage in the event of a flood?
Water-related claims are currently the primary cause of home
insurance losses in Canada, and these losses are expected to rise in
the coming years. Due to the risk and cost, homeowners in the highest
flood risk areas cannot get coverage, which causes a gap in coverage. As
a result, approximately 90% of Canada's residential flood risk areas are
uninsured.
In response, the Canadian government has committed to developing
a low-cost national flood insurance program for high-risk homeowners
who cannot obtain coverage. Other measures are being implemented in
tandem, including:
* Completing all flood maps across Canada
* Providing interest-free loans to homeowners for climate change
mitigation or adaptation improvements to their home
* Promoting flood risk awareness through online public portals
* Implementing specific measures to improve flood mitigation in
at-risk communities
* Examining flood risk for First Nations communities who are
disproportionately affected by floods due to aging or less thorough
infrastructure
In addition to the federal initiatives, the Ontario government is
committing itself to further protecting homeowners from the devastating
effect of floods. The Disaster Recovery Assistance for Ontarians plan
(DRAO) allows applicants to receive up to $250,000 to replace essential
clothing, appliances, and supplies lost in the event of a flood.
On February 3, Ontario released the Provincial Emergency Management
Strategy and Action Plan, outlining the direction of future disaster
management and mitigation strategy. Like the federal strategy, the
province seeks to mitigate disasters before they occur by proactively
planning for and mapping future disaster risk.
Ontario's Minister for Emergency Management, Prabmeet Sarkaria,
signals that Ontario is aware of the gap in coverage leaving most highrisk
flood regions vulnerable, and a comprehensive plan is necessary to
effectively tackle the challenge. Federal and provincial commitments
to mitigate and assist in the event of a natural disaster are necessary
programs, but they're far from providing a comprehensive insurance plan
to fill the gap in coverage. Until a joint comprehensive strategy is created,
risk mitigation and climate resilience are the only tools available for
Canadians at risk.
Since this article was written, further updates were released by both the
Ontario & Federal Governments-a follow-up story will be released in the
next issue.
Volume 23 | Issue 1
35
The Ontario Broker - Volume 23, Issue 1

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