‘Water is the new fire,’ says the Insurance Bureau of Canada

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Paving over porous paradise, or any absorbent ground, increases the risk of basement flooding, say researchers using City of Toronto data.

Their study could help GTA homeowners make sense of the sometimes-ridiculed notion that the amount of land people cover with buildings, parking pads, parking lots and more, is linked to the costly rising tide of urban flooding that is expected to worsen in coming years.

“From what we have seen, areas with less green space — mostly developed areas, without any consideration for pervious or green areas — are more likely to have this kind of basement flooding,” says Yekenalem Abebe, a University of British Columbia engineering PhD candidate who co-authored the study with UBC civil engineering professor Solomon Tesfamariam and Golam Kabir, a University of Windsor assistant professor in engineering.

Other factors make basements prone to invasion from “pluvial” flooding — rainwater unable to soak into the ground, as opposed to “fluvial” flooding, which occurs when bodies of water overflow. They include aging, deteriorating sewer pipes and other infrastructure meant to steer rainfall away from homes. In Toronto, some of those pipes are more than a century old and, when overwhelmed by big storms, send untreated sewage from downtown into Lake Ontario.

Images of residential flooding, including Brantford in recent weeks, Toronto Islands last summer and across the U.S., are becoming more common.

The researchers didn’t get all the data they wanted while developing a “flood vulnerability index” that any city can use. But even if they had, Abebe said, “I would still expect pavement and impervious surfaces to be one of the most important factors,” in basement flooding risk. Urbanization is accelerating the loss of absorbent ground, communities are being hit more frequently with intense storms, and costly-to-replace infrastructure is failing to handle the runoff.

The researchers divided Toronto into 760 “grid cells,” each about one square kilometre. Using city data they assigned each grid a probability of risk.

At “very high risk” for basement flooding, according to the study, is an area spreading north from Humber Bay and widening to include neighbourhoods around High Park, Swansea and The Junction, and the downtown core. Safest is the high ground in Scarborough from the Bluffs north.

The findings of the study, published late last year in the Journal of Cleaner Production, come as no surprise to Shawna Peddle, a director of Partners for Action, which promotes flood resiliency and is based at the University of Waterloo.

“We’re definitely seeing an increase in urban flooding everywhere — it’s not just Toronto, it’s everywhere across the country and it’s because we are paving over what would normally soak up the water — the water has nowhere to go,” Peddle said in an interview.

“Even if we’re having just a little more rain than we used to, the water ends up in basements and flooding roadways, flooding parks. The weather is changing, we are seeing more rain events more often. That combined with increased development, infrastructure that’s aging, us paving over areas that used to be able to soak up the water — the result is more (flood) events and bigger losses, too.”

Partners for Action offers homeowners tips, including how to check on the flood risk for their homes, on keeping valuables upstairs and checking with their insurance companies on the kinds of water damage they cover.

Cities are encouraging green roof construction, which sees rooftops covered with vegetation, downspout disconnections, and the use of porous hard surfaces and cisterns to capture and reuse rainwater.

They are also trying to figure out where to find the canyons of cash needed to replace and upgrade storm sewer systems and fund flood-risk-reducing incentive programs. Toronto last year paid $7.1 million just to subsidize homeowner installation of backwater valves and other measures to reduce the chance of residential basement flooding, up from $3.1 million in 2013.

Two years ago, Mississauga added a stormwater charge on Peel region water bills ranging from $50 to $170 per year, depending on the size of the roof and runoff potential. More than $30 million in annual revenues are being pumped into a dedicated fund to pay for stormwater infrastructure maintenance and upgrades.

Torontonians pay for pipe replacement and other parts of a stormwater management plan through water consumption fees. City staff had suggested shifting more of the costs to home- and business-owners with the biggest hard surfaces, including parking lots and roofs.

But last May, Toronto Mayor John Tory’s executive committee shelved indefinitely a staff recommendation to propose options for a stormwater charge.

The idea of such a charge had been ridiculed by councillor Giorgio Mammoliti and former councillor Doug Ford, who is now seeking the leadership of Ontario’s Progressive Conservative party, as a “roof tax,” an attack on suburban homeowners and “a measure to get into people’s pockets.”

For basement damage, the cost is borne by homeowners and their insurers. A massive thunderstorm that hit Toronto in July 2013 became one of Canada’s most expensive insured losses at almost $1 billion, mostly from sewer backup claims.

The head of one of Europe’s largest insurers recently warned the World Economic Forum that, if climate change advances, basements in some cities could be uninsurable, Bloomberg news agency reported.

But GTA homeowners have more options for flood coverage than ever because the risk is top of mind, according to the Insurance Bureau of Canada.

“Water is the new fire because, in the past, fire damage to someone’s home used to be the predominant peril or event that people wanted to protect their property or homes from,” said Pete Karageorgos, the bureau’s Ontario director of consumer and industry relations. “Now it’s water damage of all sorts, from plumbing fixtures and internal leaks, but now more so from external type of water,” that might require special coverage.

“People are recognizing there are severe weather events such as rainstorms that are occurring that are depositing larger amounts of rain in shorter amounts of time and impacting our communities.”

Flood damage not covered by most standard home insurance plans

Geoff Bartlett · CBC News 

Residents of western Newfoundland whose homes were flooded this week may have high hopes that their insurance will cover the damage, but that’s only the case if they’ve signed up for proper protection.

Heavy rain and melting snow combined to create big problems for many homeowners throughout the region, with some forced out of their homes and countless others dealing with flooded basements or worse.

This home and garage in Benoit’s Cove was mostly submerged by waters from a nearby brook on Saturday. (Submitted by Kyle Lowe)

In the Humber Arm South community of Benoit’s Cove, one elderly couple had to be woken up and escorted out of their home just hours before it was completely submerged.

Homeowners hit by the flooding may be wondering if their insurance coverage will pay for the damages, but according to Insurance Brokers Association of Newfoundland Chair Kent Rowe, it will likely depend on whether they have something called overland water protection.

Newly available

Overland water protection has  been available to residential insurance customers in Newfoundland and Labrador only for the last two or three years.

It provides coverage for loss or damages related the sudden accumulation of water after heavy rains, spring runoff or overflow of lakes and rivers. It does not apply to saltwater damage.

“In the cases that I think affected most people as a result of the weather this past weekend in western Newfoundland, I would think that overland water protection would be the endorsement that would be needed to afford coverage to most people,” Rowe told the Corner Brook Morning Show.

“If somebody has that coverage and is affected by that kind of a loss, then they should have coverage for the damage.”

Overland water damage, as seen at this home in Pasadena in western Newfoundland, usually requires a special insurance add-on in order to be covered by most plans. (Submitted by Nadine Delaney)

A typical standard homeowners insurance policy does not cover overland water damage. Rowe said people should work with their broker to ensure they have it if there is a risk of flooding in their neighbourhood.

 ‘These things are too important to assume you’re covered for everything.’– Kent Rowe

He cautioned that some clients might be denied the coverage if their insurer deemed the property location too risky.

According to Rowe, overland water damage has only just become readily available because it took companies a while to figure out how to rate it in Newfoundland and Labrador. He recommends also getting sewer backup coverage, which is also excluded from most standard policies.

Kent Rowe of the Insurance Broker’s Association of Newfoundland and Labrador says most people are not covered for overland water damage. (CBC)

Rowe said homeowners who had damage this week should still call their insurance company, even if they don’t have overland water damage protection. That’s because an adjuster will do an investigation into the damage, which at the very least will provide some useful information.

Don’t take insurance for granted

While he sympathized with those who are not covered and have to pay out of pocket for damage, Rowe said he can’t stress enough how important it is to make sure you have the right insurance plan after buying a house.

“The message is, ‘Talk to your broker.’ Don’t make assumptions. These things are too important to assume you’re covered for everything,” he said,

“Sometimes people take their insurance product for granted and they purchase the bare minimums and look at it as a bit of a grudge purchase. But you really need to carefully evaluate what you’re doing when you’re buying an insurance policy.”

White House seeks $29B for disaster aid, flood insurance

By Andrew Taylor

THE ASSOCIATED PRESS

WASHINGTON _ The Trump administration on Wednesday asked Congress for $29 billion in disaster aid to cover ongoing hurricane relief and recovery efforts and to pay federal flood insurance claims.

The request comes as the government is spending almost $200 million a day for emergency hurricane response and faces a surge in flood claims for federally insured homes and businesses slammed by hurricanes Harvey, Irma, and Maria.

White House budget director Mick Mulvaney told lawmakers in officially submitting the request that the federal flood insurance program “is not designed to handle catastrophic losses like those caused by Harvey, Irma, and Maria. The NFIP is simply not fiscally sustainable in its current form.”

Mulvaney proposed a package of changes to the flood insurance program that, among others, would protect low-income policyholders from big rate hikes, allow the government to drop from the program properties that have been repeatedly flooded, and phasing out policies on new homes in flood zones.

In the meantime, Wednesday’s request proposal would provide $16 billion to pay those flood claims, along with $13 billion for Federal Emergency Management Agency disaster relief efforts. Federal firefighting accounts would receive $577 million as well to replenish them after a disastrous season of Western wildfires.

The Senate’s top Democrat quickly backed the aid request but signalled opposition to the administration’s proposed restrictions on flood insurance.

‘This funding request is a good start, but those affected by Maria, Harvey, Irma and wildfires still have a long and difficult road ahead,” said Minority Leader Chuck Schumer, D-N.Y.  “We should act on this supplemental quickly, but it should be just the beginning of Congress’ efforts to aid in rebuilding.”

Congress last month approved a $15.3 billion aid package that combined community development block grant rebuilding funds with emergency money for cleanup, repair and housing.

The federal flood insurance program is on track to run out of money to pay claims during the week of Oct. 23. Mulvaney said more than 20,000 federal workers have been deployed by various agencies to help in the hurricane recovery effort. The “burn rate” of almost $200 million a day is requiring an infusion of cash into FEMA coffers.

The request would bring the price tag for this year’s costly hurricane season to about $44 billion and that’s before rebuilding efforts get under way in earnest. A final estimate is a ways away since damage assessments of Puerto Rico may take some time, but Mulvaney said the administration will submit assessments in time for a budget hoped-for budget agreement later this year.

The year-end package would rebuild infrastructure, help people without insurance restore their homes, and, perhaps, help Puerto Rico reconstitute its shattered electrical grid.

‘The hundreds of thousands of people affected by Hurricanes Harvey, Irma, and Maria have suffered enough. Congress must provide whatever is necessary to get these families back on their feet and to rebuild their communities,” said House Appropriations Committee Chairman Rodney Frelinghuysen, R-N.J. “This will be a long process, and this next round of funds certainly won’t be all that is needed.”

Congress is in the midst of an effort to reauthorize the flood insurance program, which critics say makes taxpayers subsidize properties that have repeatedly flooded. A bipartisan effort to reform the program was enacted in 2012. It was significantly watered down just two years later after complaints of huge premium increases and resulting disruptions in coastal real estate markets. But there’s sure to be bipartisan opposition to Mulvaney’s extensive roster of changes to the program, which has strong backing from Republicans in coastal states.

Trump raised eyebrows in a Tuesday interview with Fox News when he said the Puerto Rican government’s debt would have to be “wiped out.”

“They owe a lot of money to your friends on Wall Street and we’re going to have to wipe that out,” Trump said.

But on Wednesday, Mulvaney told reporters that “we are not going to be offering a bailout for Puerto Rico or for its current bondholders.”

Trump surveyed hurricane damage in Puerto Rico on Tuesday. He praised his administration’s response, even as lawmakers returning from the island say the president is painting far too rosy a picture.

Rep. Luis Gutierrez, D-Ill., the situation there presents more difficult challenges than disasters in the continental U.S. For instance, without power or internet service, victims of Maria can’t go online to register for aid. Housing vouchers are largely useless since the entire Island is devastated. He said many thousands of Puerto Ricans will need to be evacuated to the U.S. mainland.

IBC congratulates federal government, Ontario and the City of Toronto, for commitment to flood mitigation

Insurance Bureau of Canada (IBC) congratulates the Government of Canada, the Government of Ontario, and the City of Toronto for their commitment to flood mitigation as part of an over $1.1 billion funding announcement for Waterfront Toronto.

“Recent flood events in Ontario, Quebec and British Columbia have demonstrated the effect that these disasters can have on communities,” said Craig Stewart, Vice-President, Federal Affairs, IBC. “As a society, we cannot continue to put Canadians into harm’s way.  The Toronto Port Lands development will transform an industrial site into an attractive residential community.  Recognizing that this is a floodplain, the federal government, the Government of Ontario and the City of Toronto are investing the needed funds to ensure this new community is inoculated against flood risk.”

The governments of Canada, Ontario, and Toronto announced a commitment of $1.185 billion for Waterfront Toronto. A portion of this will be devoted to protecting the area around the Toronto Port Lands from flooding including diverting the Don River to a naturalized river mouth. As more development in the area is anticipated, investments in flood mitigation will help make this community safer for residents and stronger for economic growth.

“The era of reckless floodplain development must now end”, added Stewart. “IBC is working with the federal and provincial governments, and other organizations focused on flood-related issues, to advocate for a national strategy to address flood risk. Insurance itself is not sufficient; federal and provincial governments can coordinate on a ‘whole of society’ approach to reduce risk for consumers.”

Additional resources:

About Insurance Bureau of Canada
Insurance Bureau of Canada (IBC) is the national industry association representing Canada’s private home, auto and business insurers. Its member companies make up 90% of the property and casualty (P&C) insurance market in Canada. For more than 50 years, IBC has worked with governments across the country to help make affordable home, auto and business insurance available for all Canadians. IBC supports the vision of consumers and governments trusting, valuing and supporting the private P&C insurance industry. It champions key issues and helps educate consumers on how best to protect their homes, cars, businesses and properties.

P&C insurance touches the lives of nearly every Canadian and plays a critical role in keeping businesses safe and the Canadian economy strong. It employs more than 120,000 Canadians, pays $9 billion in taxes and has a total premium base of $49 billion.

For media releases and more information, visit IBC’s Media Centre at www.ibc.ca. Follow IBC on Twitter @InsuranceBureau or like us on Facebook. If you have a question about home, auto or business insurance, contact IBC’s Consumer Information Centre at 1-844-2ask-IBC.

SOURCE Insurance Bureau of Canada

New Online Tool to Help Canadian Farmers Manage Risk

Flooding, pests, disease and other extreme weather events are constant risks to the businesses and livelihoods of farmers. The Government of Canada is committed to working with industry partners to explore and develop new risk management tools that meets the needs of Canadian farmers when faced with serious challenges beyond their control.

Member of Parliament, Francis Drouin, today announced a $786,921 investment for Farm Management Canada to develop a new online agricultural risk management tool called “AgriShield”. This online tool will help farmers have real-time assessments of the potential negative impact of risks to their businesses and provide mitigation solutions. For instance, if an overland flood situation is imminent, the tool can help farmers to assess the degree of risk they face and potential mitigation measures that they can adopt, such as tile draining or insurance coverage.

This investment is being made through Agriculture and Agri-Food Canada’s AgriRisk Initiatives (ARI) which supports the research and development, as well as the implementation and administration of new risk management tools for use in the agriculture sector.

Quotes

“Canadian farmers face risk every day and it is essential they have the necessary tools to better understand and manage risk. The recent flooding in Eastern Ontario and Quebec, for example, shows the need to help farmers more effectively manage risk, so that they can be stronger, more innovative and more competitive.”
– Francis Drouin, Member of Parliament for Glengarry-Prescott-Russell

“Less than 1/3 of Canada’s farmers have a risk management plan. Our ultimate goal is to increase the awareness and adoption of risk management practices and planning as part of the farm management process and cultivate a more comprehensive understanding and approach to assessing and managing risk within the agricultural sector.”
– Heather Watson, Executive Director Farm Management Canada

Quick facts

  • Farm Management Canada (FMC) is a national organization dedicated exclusively to providing leading edge resources to enable Canadian producers to make sound management decisions.
  • The online tool covers all areas of potential risk faced by agricultural businesses, gathering data that will enable farmers, commodity groups and the agriculture sector to establish benchmarks for improved risk management performance.
  • Project partners include the Canadian Federation of Agriculture and the consulting firm Meyers Norris Penny.
  • AgriRisk Initiatives is a Growing Forward 2, Business Risk Management program.

Additional links

Follow us on Twitter: @AAFC_Canada
Like us on Facebook: CanadianAgriculture

 

SOURCE Agriculture and Agri-Food Canada

For further information: Guy Gallant, Director of Communications, Office of the Honourable Lawrence MacAulay, 613-773-1059; Media Relations, Agriculture and Agri-Food Canada, Ottawa, Ontario, 613-773-7972, 1-866-345-7972; Heather Watson, Executive Director, Farm Management Canada, Ottawa, Ontario, Telephone: 1-888-232-3262 Fax: 1-800-270-8301, Email: heather.watson@fmc-gac.com, www.FMC-GAC.com

RELATED LINKS
www.agr.gc.ca
https://www.canada.ca

Flooding Risks – Where The Canadian Insurance Market Is At

Article by Nicole Truong

Extreme weather events, such as the heavy rainfall and flooding we’ve witnessed this spring in Quebec and in British Columbia, inevitably lead to discussions about the impact of climate change and the cost of inaction.

The recent flooding in various riverside regions of Canada that has left citizens feeling helpless as they try to salvage their home and belongings from murky waters of overflowing rivers across the country, is a reminder that governments and the insurance industry could do more to prepare for the future.

In Canada, flooding is among the most onerous risks for the federal government. Since the 1970s, it has paid nearly $6.5 billions to flood victims, i.e. about 78% of the expenses incurred under the Disaster Financial Assistance Arrangements (DFAA). What’s more, in 2010-2014, it spent $3.7 billions in aid to flood victims.

As natural catastrophes recur more frequently, we expect these numbers to rise steadily in years to come.

New endorsement

While these are staggering figures, insurers in Canada have only just recently begun offering homeowners insurance protection against the risk of flood, already available in other G8 countries. In fact, the Insurance Bureau of Canada announced last winter that it had drafted a new endorsement against overland flooding which will be in force this coming June 1st, 2017, and therefore available to Quebec homeowners through participating insurers.

This is not to say that insurers in Canada have ignored the risk of flood. It is covered under automobile insurance and commercial property insurance policies. However, it begs a question as to why it took so long for insurers to offer a product for the Canadian homeowners’ insurance market.

Part of the reason is that the risk itself defies the economic parameters of insurance; i.e. it is not entirely unforeseeable and uncertain. In fact, floods tend to happen periodically, and the resulting damages are serious and costly. Foreseeability of the occurrence of floods leads to adverse selection of the risk and creates an imbalance on the market where a greater proportion of persons who are highly exposed to the risk buy the insurance protection as opposed to those who are less exposed. As a result, the insurance principle of risk sharing among insureds no longer applies. Eventually, offering the insurance protection is no longer financially sound and is unattractive because it is too expensive.

Role of the federal, provincial and municipal governements

But because of the scarceness of flood insurance, the Canadian federal government ends up paying the bill through the DFAA, which is funded indirectly by taxpayers. The provinces also provide financial assistance which only covers the affected populations’ basic needs. In the long run, as we witness floods more frequently, the situation will no longer be socially and economically viable. This is why it is high time for governments and the insurance industry to react and stem the tide before the situation deteriorates further.

The Canadian federal, provincial, territorial and municipal governments each have a role to play in assisting the insurance industry to control the risk of floods. The federal government is currently conducting floodplain mapping  to identify the boundaries of a potential flood event and to support informed decisions and investments to reduce the impacts of flooding in communities across Canada.

To be successful, it requires the cooperation of the provincial and municipal governments as they have the expert knowledge of the specificities of the regional and local areas. While municipal governments are responsible for tracking flood risk and implementing risk mitigation measures, the provinces supervise and work with them to set priorities. Provincial governments also regulate the insurance industry in this particular aspect. It is why all government levels must address the issue together.

Expectations for the future

Finally, the emerging market of home insurance covering the risk of flood in Canada will eventually ensure adequate and efficient reconstruction of infrastructures after major flooding. It will also make sharing information between various government levels and the insurance industry easier, which is in the interests of all parties involved, especially the victims. If the uptake of this new insurance product turns out to be positive, we can realistically expect quicker re-building and a degree of relief for the federal and provincial governments as there will be less reliance on the DFAA and public funds.

Nonetheless, we have a long way to go. Past governments have underestimated the needs to invest in infrastructures and in expert intelligence in order to assess properly the risk of flood. By putting their best foot forward in adopting a coherent and integral approach in tackling climate change and natural catastrophes, governments in Canada and the insurance industry will have to learn to respond efficiently to environmental and natural threats upstream as well as downstream.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Source: Mondaq

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