By Cheri Armstrong
Climate change and the wild weather it brings has become an increasingly large thorn in the side of the insurance industry. From flooding to wildfires and hurricanes to hail, the frequency and severity of catastrophic events have carried a heavy financial cost as well as a devastating emotional toll on customers countrywide. Increasing rates to offset losses can only go so far, and a better long-term goal is to encourage efforts for all of us to mitigate these risks.
A co-operative effort by insurance companies, local municipalities, provincial and federal governments, and of course, customers themselves is necessary to mitigate risks and reduce damage. At an industry event this past spring, President and CEO of
Economical Insurance, Karen Gavan, spoke about how brokers play a key role in advising customers on risk prevention.
“Our collective efforts to educate policymakers and customers have had an impact on losses, but it’s not enough. While insurers can provide the incentive of rate reductions to encourage customers to mitigate risks, it’s not sufficient in the short term to pay for the mounting costs of damages. Thankfully, most well-informed homeowners would rather take steps to avoid losses in the first place. No one wants to go through the heart-wrenching experience of having sentimental possessions destroyed or damaged. No matter how good we are as an industry at replacing and repairing possessions, it will never be the same.”
Gavan referenced the
Insurance Bureau of Canada’s push for the federal government to prioritize a national flood strategy as a signal that governments at all levels need to do more. “I’m encouraged to see more municipalities taking positive steps to mitigate the risk of flooding and water damage. The next step is for them to outright prohibit building approvals on floodplains. In Alberta we would love to see changes to the building code that mandates the use of impact-resistant siding and hail-resistant roofing to lessen the impact of hail events,” she explained.
Gavan believes a shift in public awareness about mitigation measures will go a long way to helping prevent future losses. “The goal would be for customers to perceive value in implementing preventative strategies and installing devices that could make a difference in the event of a claim. For example, we’d like homeowners to see sewer backwater valves as having the same value as smoke alarms or anti-theft devices.”
In the future, Gavan would like to see industry-wide co-operation with governments to make updates to building code inclusions for new construction, as well as a complete ban on floodplain building. “We can use our influence to work with all levels of government to make many of these things automatic for new construction, which is a lot more cost effective than retrofitting after the fact,” she said.
The ultimate goal, of course, is to promote sustainability efforts and arm customers with the knowledge they need to understand their insurance needs. Once homeowners feel a personal responsibility to prevent losses, they’ll be more empowered to protect themselves.
