According to the
Insurance Bureau of Canada (IBC), water damage has surpassed fire as the leading cause of home insurance payouts.
In response to the finding, the bureau is calling for a national flood mitigation strategy to address the rising threat.
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“Water is the new fire,” IBC director of consumer and industry relations Pete Karageorgos told the
Ottawa Sun.
“Insurers are paying out more with regards to water damage claims than fire damage — even though home insurance really started out as a fire protection policy.”
Data from IBC suggests that since 2009, Canadian insurers have been paying out an average of $400 million annually for damages related to severe weather events – most of which involve flooding. In comparison, during the previous 25 years before 2009, weather events cost the industry an average of $100 million a year.
“It has gone up four-fold, and there’s no reason to believe it will go down,” Karageorgos pointed out.
Although the federal government helps pay for flood damage through the Disaster Financial Assistance Arrangements program, the program continues to pay for mounting costs.
A 2016 report by the parliamentary budget officer found that the cost of disaster relief for severe weather events has been rising steadily for 20 years. From an average of $54 million between 1995 and 2004, the cost surged to an average of $410 million a year between 2005 and 2014, the report observed.
The report estimates that the federal government could end up paying $673 million annually for flood damage alone annually in the next five years.
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