Climate change is something the world can no longer ignore; its impacts are felt whenever another wildfire, storm, or flooding strikes, costing homeowners, business owners and governments billions of dollars. According to the Insurance Bureau of Canada, severe weather in 2021 led to $2.1 billion in insured damage in Canada – this should be cause for alarm, the bureau warned, as data suggests that at least $2 billion in insured losses per year could be the “new normal” for Canadians.
To contribute to the fight against climate change, the Insurance Brokers Association of BC (IBABC) recently announced that it would be working closely with environmental stakeholders and experts. The association already formed partnerships with the Institute for Catastrophic Loss Reduction and FireSmart BC to help communicate the dangers of natural disasters to both brokers and their clients.
Read more: IBABC unveils new partnership
But why should brokers care about climate change? Andrew Janzen, president of IBABC and Janzen Insurance Brokers believes that while there is a business angle to brokers helping their clients control their severe weather claims, brokers should also act as citizens of a world facing a growing global crisis.
We sat down with Janzen to understand how exactly can brokers help their clients prepare for the next disaster, why discounts on water sensors and preventative measures work, and why earthquakes might be the sleeper disaster that could cripple the national economy.
What does the IBABC do? What are your responsibilities?
The Insurance Brokers Association of B.C. is a non-profit trade association for personal and commercial insurance brokers in B.C. The association promotes brokers as the premier distributor of insurance products and services in our province, and it is also the voice of brokers to help advocate for what’s best for our clients, the general public.
I’ve been serving on the IBABC board, and I just began my term as president. My role is to help guide the association to continue to meet the needs of our members and to take action on industry issues that are important to brokers and the insurance industry in general.
Why should insurance brokers take a more active stance in mitigating the impacts of climate change?
Brokers are in the business of protecting people. We help our customers find the best insurance for their needs to protect them when unexpected disasters happen. Unfortunately, those unexpected disasters are happening more frequently and on a bigger scale. From a business and industry standpoint, it makes sense that we need to help people mitigate the risks from these climate-related events.
Otherwise, the claims continue to get bigger, and the insurance companies start to pull away from certain risks either by raising premiums and deductibles or not offering coverage for certain areas at all. From a personal perspective, climate risk isn’t limited to affecting one industry, or country, or continent. It’s a global problem, and we should all be doing whatever part we can to mitigate the impacts of climate.
Apart from sharing valuable climate change data with clients, how else can brokers help their clients better protect themselves against the effects of climate change?
Clients hear about climate data from numerous sources – I believe our role is to get the information and resources out to people to give them direction on what they can be doing. There are programs like FireSmart B.C. that have practical tips homeowners can implement immediately to better protect their properties.
There is information for building more fire-resilient homes and buildings. The Institute for Catastrophic Loss Reduction has resources for homeowners, business owners, and municipalities for flood, wind, fire, hail and earthquake. What we as brokers can offer is a direct connection to get those resources into the hands of consumers.
We also take our role as consumer advocates seriously. Through the Insurance Brokers Association of B.C., brokers can speak with one voice to government and insurance companies to promote changes and policies that can help the public in these situations. The more we can get all of us working together toward a common solution, the better off our customers will be.
Between wildfires and flooding, which natural disaster is the biggest threat to BC property owners?
If you look at 2021 as an example, wildfires and flooding were both pretty prominent for our province. In terms of claims, the wildfires in Lytton and White Rock Lake had $102 million and $77 million in insured damage respectively, while the November floods caused $515 million in insured damage.
The money says that flooding is the biggest threat to property owners, but I think they are likely equally responsible for the threat to properties. If you look at the science, there is a link between the destruction from wildfires and increased risk of flooding. Wildfires destroy the overhead canopy that helps slow the flow of water when it rains. Fires also can create a water-repellent crust in fire zones that allow heavy rain to shoot quickly down slopes.
Debris from fires gets more easily swept up in floods. Scientists are seeing a correlation between areas of severe flood damage where there were washouts and erosion to areas that also had severe wildfires. So, it’s not a simple one or the other is the bigger threat, especially here in B.C. where we’ve seen such a high potential for both.
While not climate-related, I think it’s important to note that earthquake is actually our largest natural disaster risk. In 2013, the Insurance Bureau of Canada’s earthquake study modelled a major, realistically possible earthquake in B.C. A 9.0 magnitude earthquake would likely result in about $75 billion in economic losses, with only $20 billion of that being insured losses.
What can brokers do to improve the insurance industry's response whenever a major calamity strikes?
A broker has a few roles in these situations because we are public facing and often are the only insurance professionals that our clients will encounter. Our job is to communicate, answer questions, and help our clients manage and minimize risk.
When our clients suffer a disaster, we are who they call first. Claims are our chance to dance and really show the value of the broker. An incredibly important part of that is for us to keep communication flowing. Not only are we relaying information from the insurer, we often find we are the go-between with swamped contractors and adjusters for customers. The more we can keep those channels open and information flowing, the more we help minimize the stress our customers are experiencing on some of their worst days.
Helping our clients manage and minimize risks to prevent a claim is ever important. If people are taking steps to reduce their risk and how much they will be impacted by a disaster, it takes some pressure off when disaster does strike so the industry can respond in better ways. Most people believe it will never happen to them, but if they see their friend or neighbour impacted they will be more interested in what they can do. We need to have clear steps to share to help them from being affected.
And, money talks. As insurance rating algorithms get ever more sophisticated, introducing discounts for water sensors, sewer backup valves and wildfire preventative measures often are the steps that consumers need to help them take the step. Brokers, and our association, can advocate for more of those discounts from insurers. We love to share with our clients how they can reduce their risk and their insurance premiums at the same time.
