Insurers are warning of the disastrous impact of climate change and flooding
The Canadian insurance industry is beginning to express serious concerns about climate change. Severe flooding struck Alberta in 2013, causing massive damage in many populated parts of the province. These floods were unusual for the time of year in which they occurred. The Alberta government has identified the floods as the worst natural disaster to befall the province, causing some $1.7 billion in financial damage. Insurers are warning that floods, as well as other natural disasters, will become more common in the future.
Flooding is expected to become more frequent throughout Canada, leading to massive insured losses
Climate change is often an issue that is approached with extreme caution. This is because of the fact that the issue has become highly politicized, making meaningful discussion difficult to accomplish. The insurance industry is not one for politicizing potentially disastrous events, however, and has quietly been working to shed light on the increasing frequency of natural disasters throughout much of Canada. Flooding is proving to be a particularly problematic issue for insurance companies, and some are considering exiting the flood market because of the financial problems it can create.
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Insurers call for the creation of a national flood insurance program
Canadian insurers are now urging the federal government to work on developing a national flood insurance program. Such programs are meant to provide homeowners with the flood protection that they need, but take the financial burden off of the insurance industry. While insurers continue to offer policies through the program, these policies are backed by the government, significantly mitigating the risks that insurance companies face in providing coverage for natural disasters.
Insurers are taking steps to protect themselves while still offering services to consumers
Over the past several months, premiums for flood protection have grown, but some insurers have also reduced the deductibles associated with their policies. Some companies have opted to reduce the benefits they offer with their flood protection. While Canada’s insurance industry is quite resilient, it may not be able to continually withstand the impact on flood disasters without the aid of the federal government.