Is there a better coverage solution for flood plain residents?

When insurers recommend consumers pack up and move from their flood-prone homes, it’s easier said than done.

That’s why the industry needs to come up with better resilience solutions and more efficient claims response to protect the customers most impacted in floods, said one industry expert at Cat IQ Connect.  

“There’s a lot of talk about [how consumers] should just move from a flood zone [or] move from a fire zone, and sure that’s one solution, but the reality is that most people, most businesses, don’t have the luxury to be able to do that,” said Joe Fidilio, chief claims officer at Zurich Canada.  

“We want to partner with our insureds to make sure that we’re building that resilient, sustainable future for them regardless of where they are.”  

But to do this, the industry must get creative, Fidilio observed during a panel discussion on The BC Floods – Claims Perspective. “I think that innovation in the insurance industry is going to be key to ensuring resilience and sustainability as we go forward.” 

British Columbia suffered the worst flood event in its history in late 2021, causing approximately $675 million in insured damages (up from earlier estimates of $450 million).  

However, the damage pales in comparison to the Calgary floods of 2013, which cost insurers an estimated $1.8 billion in insured damages. The (relatively) low tally in BC is, in part, due to the damage being done in un- or underinsured areas such as floodplains, as well as farmland and sparsely populated areas.

Some damage also happened in areas covered by government funding. 

Part of the solution is to get claims adjusters on site more quickly following a disaster. And technology is critical for this, Fidilio said.  

“If we can automate [claims response] as much as possible, and we [leave] the decision-making that needs to be left with individuals to those individuals, that frees up our ability to move quickly and respond very quickly.” 

However, to better cover BC residents affected by flood who can’t relocate on a whim, the industry should help insureds build more resiliency into their homes and businesses, Fidilio recommended.  

“I think about things like our build back better proposition,” he said. “So it’s not just about repairing or replacing what was there exactly the way it was. Because ultimately, as we continue to see these events happen and recur in the same place, if you build the same [way], the same damage is going to happen to that location… 

“We have the benefit of being able to go in and fix what’s there so that it can be resilient to that next flood, the next fire.”  

But it’s not just an industry solution, he said. “That’s going to require partnerships with governments and public sector.”  

Government incentives to get residents out of flood plains have been previously implemented in provinces, with varying levels of success.  

For example, the Quebec government in 2019 offered to buy floodplain residents’ homes at a maximum cost of $200,000 after the province experienced massive flooding. However, residents — especially those whose homes were being offered buy-outs at below market value — were not keen to take the offer.  

Further, Mississauga Mayor Bonnie Crombie in 2018 announced the municipality bought-out about 50 homeowners in high-risk flood zones at market value, to be converted to parkland. A similar plan, however, was reportedly less successful in southern Alberta following the 2013 Calgary floods.  

 

Feature image by iStock.com/zepp1969