The Trudeau government is under increasing scrutiny for its failure to address the escalating risks of floods and wildfires, despite a recent record-breaking summer of insured losses. In the wake of the government’s Fall Economic Statement (FES), Celyeste Power, president and CEO of the Insurance Bureau of Canada (IBC), criticized the government’s lack of investment in climate adaptation and resilience programs, highlighting concerns over the future of flood insurance for Canadians.
This summer, Canada experienced its costliest season on record, with nearly $8 billion in insured losses, including damage from floods, hail, and wildfires. In response, Power expressed disappointment that the government’s FES, released earlier this week, did not include funding for a national flood insurance program, a commitment made earlier this year in Budget 2024. The proposed program was notably absent from the recent fiscal update.
“The Trudeau government has once again failed to invest in climate adaptation measures and resilience measures that are needed to keep Canadians safe,” Power said in her statement. “This week’s Fall Economic Statement (FES) also demonstrates a broken commitment made in Budget 2024 to implement a national flood insurance program for high-risk households by 2025. Needed funding to stand up a subsidiary of CMHC by April 1 was not included in the FES.”
Meanwhile, the Canadian property and casualty (P&C) insurance industry has already developed a range of overland flood insurance products, now available to over 90% of homeowners. Despite this, about 1.5 million households remain at high risk of flooding but lack access to insurance coverage.
Since 2015, the P&C insurance sector has paid out over $9 billion in flood-related claims, with nearly $4 billion paid out this past summer alone. Despite these efforts, Power stressed that many Canadians are still unprotected.
“Insurers have offered to partner with governments on a specialized flood insurance program that would replace costly taxpayer-funded government bailouts, such as Disaster Financial Assistance Arrangements,” she said. “While Finance Canada continues to study and debate this flood program, policyholders and taxpayers will continue to bear the brunt of poor planning decisions, aging infrastructure and our changing climate. This gap in financial protection will only grow as more homes are built in regions at high risk of natural hazards.”
A new report by the C.D. Howe Institute revealed that Canada ranks among the most expensive countries to insure in the OECD, largely due to the absence of public-private partnerships like the proposed flood insurance program. The report also underscored the correlation between such partnerships and the affordability of insurance.
Beyond flood insurance, Power criticized the government’s inaction on climate adaptation, particularly regarding wildfires. She noted that the government had chosen to allocate substantial funds toward climate initiatives that would not address the immediate risks posed by floods and wildfires. In addition, Power raised concerns over the government’s housing plan, which encourages new construction in flood-prone areas without considering the risks associated with climate change.
The lack of government action on these critical issues comes as communities across Canada grapple with the impacts of severe weather events. “IBC and the P&C insurance industry are disappointed in the lack of urgency shown by the government on this serious issue that has impacted hundreds of thousands of Canadians this year,” Power concluded.
Do you have something to say about this story? Share your thoughts in the comments below.
