No flood insurance without new maps, say CEOs

Insurance executives say homeowners will never have access to comprehensive flood insurance in Canada unless there are new maps of flood-prone areas that take climate change into account.

That's the finding of a study that surveyed senior executives at13 Canadian insurance firms on extreme flooding, which devastatedparts of southern Alberta and Toronto this year and is becoming morefrequent across the country.

Affected homeowners are often surprised to learn their policies, while covering sewage backups, do not pay for damage from waterentering basement windows from swollen rivers and streams.

Canada is the only G8 country where this so-called overland floodinsurance is simply not available in the private sector.

"Most insurers agreed that existing flood maps are inaccurate,outdated and inadequate for insurance purposes," saysthe study bytwo experts at the University of Waterloo.

"This data gap poses a clear threat to the viability of floodinsurance."

Insurers focused on flooding

The Canadian Press obtained an advance copy of the report byacademics Blair Feltmate and Jason Thistlewaite, to be released Monday. Their research was paid for by the Co-operators Group Ltd.,a large insurance firm.

The insurance industry is sharply focused on flooding, which inthe last 15 years has become their biggest payout area.

That'sbecause of extreme weather events that the executives agree arelinked to climate change.

"The big cost now ... is flooding basements, by a countrymile," said Feltmate. "So it's really high on their radarscreen."

Canada has seen 289 flood disasters since 1900, the largest suchcategory, more than the number of hail, wildfire andwinter stormdisasters combined in the same period.

Floods are expensive. The southern Alberta floods last summer areestimated to have cost private insurers $2.25 billion, even thoughdamage to residences was generally not covered.

In 2011, floods inManitoba and Quebec also racked up millions in payouts.

High risk for government, private business

The federal and provincial governments are also exposed to hugecosts under the Disaster Financial AssistanceArrangements, whichpay a disproportionate amount for overland flooding compared withstorm, hail andwildfire disasters, which are often already coveredunder private policies.

Existing sewage-backup coverage is also hurting private insurers'bottom lines because climate change results in more torrential downpours that overwhelm aging municipal infrastructure and can't beabsorbed by an ever-more-paved urban landscape.

Feltmate cites the example of a Toronto neighbourhood, south ofthe Downsview airport, where a large percentage of basements wereflooded three times since May this year.

Executives would consider offering overland-flood insurance, saysthe survey, but can't begin to draft policies or set premium levelsuntil proper maps accurately identify the new risks arising from awarming planet.

"We need new flood-plain maps that take into account not thehistorical weather but the weather that can be expected goingforward," said Feltmate.

The study says existing maps are badly out of date, and focus onhistorical hazards for land-use planning rather than potential risksin the decades to come.

The federal Public Safety Department acknowledged the cartographic gap recently by ordering a new study that will surveyflood-mapping in six countries, including the United States.

The report, due next March, will also assess the state of floodmapping in Canada and estimate the costs to meet any new nationalstandard.

Federal floodmap plan killed in mid-'90s

The department notes that a previous federal program to generatefloodplain maps was killed in the mid-1990s, and little has beendone since.

Feltmate says the next phase of his research is a year-longsurvey of mayors, town councillors, premiers and others who willhave to become part of Canada's flood solutions.

The study, also supported by Co-operators, will consult as wellwith bank executives, who Feltmate says are only dimly aware of thethreat that increased flooding poses to their mortgage business.

That's because mortgages are contingent on a homeowner obtaininginsurance, and many insurance companies may begin to steer clear of properties prone to frequent basement flooding, such as in theDownsview neighbourhood.

"The banks have a much greater stake in this game than theycurrently realize," said Feltmate.