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Urban Flood Risk and Insurance
Dan Sandink, MA, MScPl
Manager, Resilient Communities & Research
Institute for Catastrophic Loss Reduction
CVC – November 4, 2013
What is ICLR?
• Founded in 1997 by Canadian P&C industry
• Current focus on:
• Urban flooding, wildland fire, wind, earthquake
• Key risk reduction avenues: Infrastructure, land-use
planning, home retrofits and new homes
• Multi-disciplinary
• Engineering, climatology, seismology, economics,
political science, geography, planning
0%
20%
40%
60%
1970 1980 1990 2000 2010 2020
Proportion
of fire
claims
Proportion of water
and wind claims
Trends in homeowner claims—1970 to 2009 (Canada)
Source: ICLR based on data from IBC
• Mississauga, Brampton, Toronto,
2013: >$850 million
• Thunder Bay, Montréal, Ottawa,
Hamilton, Toronto, Steinbach,
2012: >$350 million
• Hamilton, 2009: $100-150 million
• Southern Ontario, 2005: >$500
million
• Peterborough, 2004: $87 million
• Edmonton, 2004: $166 million
• MANY OTHERS!
Recent large loss events - homes
IBC, 2012: $1.7 billion average insured water
damages per year in Canada
Southern Alberta, 2013: $1.7 billion –largely commercial,
with significant home (SB) losses
Large payout events
2
2
3
3
4
15
27
40
44
47
0 10 20 30 40 50
Wildfire
Icestorm
Ice, freezing
Snow, snowstorm
Hurricane
Tornado
Storms (tropical…
Hail
Wind
Flood & Rainstorm
IBC, 2000; 2008; PCS, 2013
Large Payout Events by Hazard, 1983-2006; 2009-2012
Overland flood not insured for
homeowners
Average water damage claims
Province Increase:
2002-2012
British Columbia 154%
Ontario 136%
Alberta 109%
NFLD/Labrador 107%
Quebec 84%
Nova Scotia 61%
New Brunswick 50%
National average 117%
Source: Aviva Canada, 2013: http://www.avivacanada.com/press/nearly-40-cent-all-home-insurance-claims-are-result-water-damage-
aviva-canada-data-shows
• 2002 average: $7,192
• 2012 average: $15,500
• Use of basements as
living spaces
Retrofit measures
Windows, Window
Wells
Seal Cracks
BW Valve Lateral inspections, repair
Maintain Eavestroughs, Down
Spouts
Down Spout Disconnection,
Splash Pads
•Lot grading, Swales
•Backfill Capping
Foundation Drain, Sump
Regional SB risk reduction
Isolated SB
risk reduction
Behavioural measures
43%
11%
45%
1%0%
10%
20%
30%
40%
50%
60%
n=674
Yes No Don't Know No Response
Do you have insurance coverage for sewer backup (Sherwood Forest, London, Ontario)?
• Report flood events, details to municipality
• Many report only to insurance, or to no one
• Discuss insurance coverage with provider
• Talking to municipality about acceptable risk reduction measures – based on home, subdivision
• Conduct plumbing investigation, have proper inspections performed
Insurers
• Financial measures
• Limit financial exposure through:
• Caps, availability
• Mitigation measures
• Policy holder education
• Incentives
• Caps, availability, premiums
• For education, brokers are often on the “front lines”
No claims, no
mitigation: $170/year
With mitigation:
$120/year
1 claim, no
mitigation: $350/year
With mitigation:
$170/year
Insurance incentivesNo claims, no
mitigation: $50/year
With mitigation:
$40/year
1 claim, no
mitigation:
$110/year
With mitigation:
$50/year
Many insurers, many approaches
May also affect: deductibles, caps, availability
2 events in 5 years, 3 in 10 years
Risk areas frequently based on FSA, postal code
Mitigation measures
13%
54%
32%
1%0%
10%
20%
30%
40%
50%
60%
Yes No Don't know No response
Do you have a backwater valve in your home?
n=674
• Many insurers focus on backwater valves and/or sumps only
Conclusion
• Water damage a major driver for P&C insurance
claims
• Many insurers incentivizing mitigation measures
• Incentives provided by different insurers are not
uniform
• Incentivized measures might be too uniform
• Important role of brokers
• Focus of mitigation, education is on sewer
backup only
• Policy holder insurance issues will depend on
risk reduction by all players