Who should bear the financial risk of flooding?

OTTAWA — Federal, provincial and municipal governments can do a better job of protecting homeowners from the escalating financial risks of flooding, says a new report released Tuesday by the Insurance Bureau of Canada.

The report, the product of work by a national working group co-chaired by the bureau and the federal Public Safety Department, says the worsening threat means the country has to change how it covers the resulting cost of such disasters.

“Taxpayers cannot continue bailing out people who live on floodplains,” said Craig Stewart, a vice president at IBC and co-chair of the working group.

“We need an alternative, and this report presents three viable options drawing upon international experience.”

About one-fifth of homes in Canada are at risk of overland flooding, while insurance payouts have surged to about $1 billion per year over the past six years, the report estimates. Federal government transfer payments for all forms of flood damage, meanwhile, have quadrupled over the last four decades, reaching about $3.7 billion during the first four years of this decade, compared with just $300 million during the 1970s.

The three options laid out in the report include a pure market approach where risk is borne by homeowners; one in which government is more involved, and finally the creation of a high-risk pool of funds to help manage the financial risk.

All three options are viable, the report says, though its analysis suggests the high-risk scheme fares better than others at meeting certain core principles like affordability, efficiency and financial sustainability. But the report stops short of making a firm recommendation on any of the options.

The advantage of the high-risk scheme is that it allows insurers to pass on some risks to a larger pool of available money. Homeowners would pay premiums for flood insurance, which insurers would then feed into the pool. If a homeowner makes a claim, the insurance company would pay out to the customer and then claim their own reimbursement from the pool.

Homeowners might not even know they’re in the high-risk pool, Stewart said, but it allows insurance companies to avoid some of the risk involved with insuring people whose homes may be flooded.

The cost of the premiums feeding into the pool should be based on the risk of flooding, Stewart said, and if subsidies are capped, the pool will need a source of money to make up the loss.

As for the source of money to get the pool off the ground and keep it sustainable, “It could be anything,” he said, including property taxes or insurance premium levies.

Ideally, Steward said, the scheme would help lower the risk enough so the high-risk pool wouldn’t be necessary. A similar model was implemented in 2016 in the United Kingdom, and has a projected lifespan of 25 years.

“For that to happen,” Stewart cautioned, “you need to have significant government investment in mitigation over those 25 years.”

While the federal government has promised $2 billion for disaster preparedness, the report notes “ongoing funding” is needed.

Stewart said the IBC is currently working with the Federation of Canadian Municipalities to figure out how much money it will cost to make Canada resilient to flooding, as well as other natural disasters.

More money from government is one of several key factors that the report says are needed to address flood risk in addition to an insurance system.

Another is making sure individuals have an incentive to take action on their own, Stewart said. That means increasing public awareness of risks so homeowners will make their properties more resilient and react to the price of insurance premiums.

Meanwhile, improving the quality of data, like mapping flood risk zones, is “the single greatest thing the federal government can do in the near term,” Stewart said.

Moving people away from high-risk flood zones should be a part of the government’s response as well, he added. Paying people to relocate might be the best way to do that, the report suggests.

Desperate for lifesaving insulin, Americans head to Canada

The excerpreted article was written by  | The Globe and Mail

There’s a new kind of drug runner in town – American mothers of children with Type 1 diabetes who cross into Canada in minivans to buy life-saving insulin at a fraction of the cost they would pay at home.

In The Washington Post, reporter Emily Rauhala tells the surreal tale of a caravan of Minnesota moms who travelled to Fort Frances, Ont., where they purchased $1,200 worth of insulin at a local pharmacy, a stash that would have cost them $12,000 in the United States. (Humalog, a popular product, sells for $34 in Ontario, without a prescription. In the U.S., the same vial costs as much as $300.)

The journey was loaded with symbolism, recalling the caravan of migrants headed to the U.S. from Latin America, which was turned back, in part, because President Donald Trump said it was harbouring drug smugglers.

But the insulin moms primarily want to draw attention to the perversity of U.S. drug prices, the absurdity of patent laws and the failings of the insurance system.

Insulin was discovered almost a century ago by researchers affiliated with the University of Toronto. It was one of the great medical discoveries of all time, a drug that has saved millions of lives. The pioneering scientists involved wanted patients with diabetes to receive insulin at little or no cost, so they sold their patent for $1 to the university.

In a rational world, insulin, a drug that is as essential to survival as water for some, would cost next to nothing.

Yet, in the wealthiest country in the world, patients with Type 1 diabetes ration insulin, and even die, because it is unaffordable.

Insulin was first derived from animal sources such as dogs and pigs. Then came synthetic “human insulin,” recombinant products and bioengineered insulin analogues. Once injected with needles and syringes, insulin is now delivered with pens and pumps, based on careful monitoring of blood sugars.

Each of these iterations has improved safety, efficacy, tolerability and convenience. They have also allowed manufacturers to secure new patents on the processes and products – and increase prices. And increase them they have.

According to a report from the Health Care Cost Institute, between 2012 and 2016, the average cost of treating diabetes for a U.S. patient nearly doubled, to $5,700 from $2,900.

READ MORE HERE: 

Details can be shared for parking enforcement purposes, according to SGI privacy policy

Read more

Tenant insurance can make all the difference

NEWS PROVIDED BY

Insurance Bureau of Canada

With moving day fast approaching, Insurance Bureau of Canada (IBC) would like to point out that 37% of tenants are not insured, even though home insurance could make all the difference in case of loss.

Average premium for tenants: $281 in 2017
According to the data collected by IBC from its members, it costs tenants less than $1 a day, or $281 on average per year, to insure their belongings. However, the average claim paid out by insurers in 2017 was $5,542.

IBC notes that home insurance covers policyholders’:

  • Belongings (furniture, clothing, electronic equipment, etc.) based on an amount determined by the insured
  • Civil liability for damages they may unintentionally cause someone else
  • Additional living expenses for lodging and food payable by a tenant following a covered loss

“Every year, we hear sad stories of families that have lost everything. We’d like to make tenants aware of the importance of protecting their property by having insurance. Contrary to popular belief, the building owner’s insurance doesn’t cover the tenant’s property. So it makes even more sense to look into getting and shopping around for tenant insurance,” notes Line Crevier, Supervisor, Technical Affairs, at Insurance Bureau of Canada.

Property inventory: a key stage
The Personal Property Inventory is IBC’s most popular brochure. A revised and user-friendly PDF version has just been published to help users list all of their belongings. This comes in handy when purchasing a policy that includes an insurance amount that covers one’s belongings. In addition, this stage could facilitate the claims process in case of loss.

“You’d be surprised to learn just how much more you own than you think! That’s why we’re encouraging everyone to make an inventory of their belongings. It’s a key stage when purchasing coverage that meets one’s needs”, added Ms. Crevier.

The Personal Property Inventory is available at Infoassurance.ca.

Making moving easier
As July 1 approaches, IBC has some tips to share:

  • Home insurance covers the tenant’s property at his two addresses for a period of 30 days
  • Each co-tenant or spouse who has been living with the tenant for less than one year needs to be added to the home insurance policy
  • It’s important to inform one’s home and auto insurer of the new address as premiums vary from city to city, or neighbourhood to neighbourhood.

About IBC
Insurance Bureau of Canada, which groups the majority Canada’s P&C insurers, offers various services to consumers in order to inform and assist them when purchasing car or home insurance, or making a claim. For all other information, we invite you to contact our Insurance Information Centre at 1-877-288-4321, or visit our web site at www.infoinsurance.ca.

SOURCE Insurance Bureau of Canada

http://www.ibc.ca/

Climate change is ‘existential’ threat, says insurance CEO

Read more

Will cover commercially viable sales contracts of canola seed, oil and meal

Read more

Subscribe To Our Newsletter

Join our mailing list to receive the latest news and updates from ILSTV

You have Successfully Subscribed!

Pin It on Pinterest