Insurers, local governments urged to work together on flood risk

Insurers, local governments urged to work together on flood risk | Insurance Business Canada

Catastrophe & Flood

Insurers, local governments urged to work together on flood risk

Research highlights advantages of shared risk data

Catastrophe & Flood

By
Terry Gangcuangco

New research from the University of Waterloo suggests that better collaboration between insurers and local governments on flood-risk management data could lead to more affordable insurance premiums. The study comes amid the rising costs associated with flood damage in Canada.

A team of climate experts from Waterloo’s Faculties of Environment and Arts has developed a research platform highlighting the advantages of shared risk data. The goal is to build on insights from both insurers and local governments.

Dr. Jason Thistlethwaite, a professor in the Faculty of Environment at Waterloo and co-lead of the Climate Risk Research Group, stated: “Insurance companies use data to calculate a property’s flood risk and the resulting costs, including information on the characteristics of a house or the surrounding area.

“But municipalities use data to identify flood-prone areas of a town or city and make decisions to prevent and mitigate flooding to neighbourhoods with measures like upgrades to infrastructure. The problem is, they haven’t been working together and the consumer is on the hook.”

Last year saw more than $3 billion in claims due to extreme weather events, according to data from Statistics Canada. Meanwhile, Insurance Bureau of Canada figures suggest that over 10% of Canadian homeowners are unable to obtain flood insurance.

“If we continue to ignore this gap in insurance coverage, it is only going to get worse,” warned Dr Daniel Henstra, Climate Risk Research Group co-lead and a professor in the Faculty of Arts at Waterloo.

“Governments and insurers are missing an opportunity to make infrastructure more resilient. Data that demonstrate how investments in risk reduction lead to lower premiums even over the long term would go a long way to improving the business case for climate resilience.”

What do you think about this story? Share your thoughts in the comments below.