Islanders may have hard time finding storm surge insurance as climate change risks rise

·3 min read
A report released last month said that by 2050, the province will see significantly more severe weather conditions due to climate change. (Andrew Vaughan/Canadian Press - image credit)
A report released last month said that by 2050, the province will see significantly more severe weather conditions due to climate change. (Andrew Vaughan/Canadian Press - image credit)

Islanders looking toward a future of more frequent extreme weather events may not be able to find the protection they need through insurers just yet.

A report released last month said that by 2050, the province will see significantly more severe weather conditions due to climate change.

The report said there will be increased risk of coastal erosion, heat waves, heavy rain, flooding, severe ice storms and droughts.

Amanda Dean, the Atlantic director of the Insurance Bureau of Canada, says her industry has been paying out more in terms of water-related claims in the past number of years.

"Water, as we say within the insurance industry, is the new fire," Dean said. "Insurers have been seeing increasing water-related claims, so anything from burst pipes to sewer backups to flood insurance coverage, which is relatively new in Canada."

Dean said Canadians could start getting flood insurance coverage in 2015.

But she said most insurers are still not covering some of the weather events outlined in the report, such as storm surges and coastal erosion.

Siri Photography
Siri Photography

"When you're talking about storm surge, that is still an area where insurers are looking to see how they can accurately assess the risk," she said.

"As we speak, in this country there's only one insurance company that actually offers storm surge coverage. And now when we talk about storm surge, it's specifically related to saltwater entering the home. So things like erosion are not covered."

'Complicated risk'

Dean said insurers have yet to develop extensive risk mapping when it comes to coastal floods, which means they have trouble determining the likelihood and the impact of such an event.

"When insurers have taken a look at flood in general, they started taking a look at freshwater. And that's primarily because of when you look at the nation's geography, that's what the greatest risk is," she said.

"It's a very complicated risk too, because when you think about it in some cases, especially if buildings were built very close to the coastline, it's not a question of 'if' it will flood, it's a question of 'when.' And insurance exists to pay the claims for those perils that arise unexpectedly."

Dean said all that means homes next to the coastline that have a high risk of flooding may not be able to get storm flood insurance, or that the coverage that is available to them is prohibitively expensive.

As for coastal erosion, Dean said insurers don't offer coverage for that because they can't replace the land that's lost.

"One of the other core principles of insurance is a term called 'indemnity,' which basically means putting you back in the same financial position that you were prior to the loss," she said.

"There's no way that an insurer can rebuild land because nobody's figured out how to do that just yet. So once the land is gone, it's gone."

Dean said people should have conversations with their insurance broker or agent as to what coverage is available to them when it comes to flooding and other weather events.

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