Insurance industry raises alarm about cost of climate change 

The Insurance Bureau of Canada (IBC) is warning Canadians that coverage for homes in high-risk areas could soon become unaffordable or impossible to obtain.

“I think we have an awful lot of work to do as a country,” said Amanda Dean, vice-president of IBC’s Ontario and Atlantic regions. 

Canada is the only G7 country that does not have a federal government program that ensures resilience and relief from natural disasters, specifically floods and wildfires. Dean wants Canada to look to environmental models like those enacted in France and the United Kingdom.

“Our members — the insurance companies — are directing us to find solutions, and a lot of those solutions involve becoming more resilient, becoming better prepared to deal with fire, especially wildfire, and to get out there and adapt to flood as well as hurricane risk, and in Ontario, tornado risk,” she said. 

In the United Kingdom, the natural flood management program began in 2023.  The $47-million program installed environmental measures to reduce the risk of flooding and make areas more resilient to climate disasters. Those expert-advised techniques include restoring natural bends to rivers, mitigating erosion, and managing leaky dams.

According to the environmental agency that runs the program, it serves not just as flood mitigation, but improves water quality and overall ecosystem health. 

The association announced earlier this month that insured claims reached $8.5 billion for climate-related damage last year. The report cautioned that though the August hailstorm in Alberta was the costliest weather event of 2024, flooding continued to cause damage in every region of Canada. 

IBC wants governments to protect homes where insurers can’t, saying people in high-risk areas could lose their insurance altogether. 

Too much risk

The devastating wildfires in California this month have reminded many that extremely high-risk areas may not be safe to build homes in at all. Halifax, similarly, is currently determining regulations for building development in the Sackville River floodplain, which last flooded in July 2023.

The July flash flood prompted the city to request the provincial government buy homes from residents who continue to experience severe flooding, especially an area on Union Street near the Bedford Place Mall, along the Sackville River. The provincial government still has not responded to that request.

“Some of those houses I’ve been in two, three, four times with flooding. The ones in July of ’23 were the worst, of course, and I even had a little water in my own basement in Bedford,” said Tim Outhit, MLA for Bedford Basin, which includes the affected area. In 2023, he was also the former Halifax regional councillor for District 16, Bedford-Wentworth, representing the same residents municipally.

Outhit said he’s concerned with how dangerous it is for some residents to continue to live there. 

“In some cases, the water was coming in doors and windows gushing, people were in their pyjamas and bare feet and running out of the house and into the car and trying to get out of the neighbourhood,” he said.

 “It was a real safety issue, and we’re quite lucky that nobody drowned.”

Outhit was the councillor who originally brought the issue to Halifax regional council, which unanimously decided to ask the province buy certain Union Street homes. 

“It’s complicated because not everybody wants to sell,” he said. “How do you price them? There are so many flood zones across the country.”

Outhit’s successor, Coun. Jean St-Amand, said he and other affected council members will meet soon to discuss new regulations and new mapping of the Sackville River floodplain.

 St-Amand said some residents are anxious that if the new floodplain map is accepted, it could affect their property values and insurance.  

“If the flood area encroaches on their property, then the insurers could still view their property as a risk,” he said. “And so, there’s not universal agreement necessarily on the path forward.”

Outhit said many Bedford and Lower Sackville homeowners did receive federal bailout money for damage from the July 2023 flooding. He said the new 2025 guidelines for federal Disaster Financial Assistance Arrangements will likely “heat up” discussions between the city and the province, who would need to ask for federal funding to buy Union Street homes. 

The July 2023 Sackville flooding caused $257 million in insured damage, according to a report by IBC. Many residents in the Sackville River floodplain can’t get overland flood insurance at all, or residents were uninsured. 

Dean said that with worsening weather and erosion, floodplain homes aren’t likely to be insured since insurance companies see them as too high risk. She wants governments, particularly the federal government, to step in with a sustainable flood program for those areas.

“It’s those properties in the high risk zones that we need a national flood program for,” she said. “And that also means taking a look at where we’re building, having a national strategy about not building in floodplains.”