Canada’s federal government has reneged on its commitment to fund a federal flood insurance backstop, and the nation’s property and casualty insurers are “disappointed” they remain holding the bag for covering high-risk natural catastrophe areas.
“After the costliest summer in Canadian history, with almost $8 billion in insured losses due to floods, hail and wildfires, the Trudeau government has once again failed to invest in climate adaptation and resilience measures that are needed to keep Canadians safe,” Insurance Bureau of Canada president and CEO Celyeste Power comments in a public statement regarding the federal government’s 2024 Fall Economic Statement.
“This week’s Fall Economic Statement (FES) also demonstrates a broken commitment made in Budget 2024 to implement a national flood insurance program for high-risk households by 2025. Needed funding to stand up a subsidiary of CMHC [Canada Mortgage and Housing Corporation] by April 1st was not included in the FES.”
In the 2024 budget, the federal government committed to putting forward $15 million in funding to create a subsidiary of the CMHC to oversee the flood program. At the time, the industry said that was “not enough” money to establish the subsidiary.
Canada’s insurers went on to criticize the fall economic statement for failing to budget any money for resilience measures that would help Canadians protect their homes from elevated natural catastrophe risks arising from climate change.
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This year saw four natural disasters – flooding in Ontario and Quebec, a wildfire in Jasper, Alta., and a record-breaking hailstorm in Calgary – result in 228,000 in insurance claims in less than a month. In contrast, the industry processed 160,000 insurance claims in all of 2023.
For more than a decade, the industry has lobbied the federal government to create a public-private federal flood backstop that would provide affordable insurance to Canadians living in high-risk flood areas. Canada remains the only G7 country without some sort of government backstop to handle properties at high risk of flooding.
The federal government committed to establishing a flood insurance program in its 2023 budget, but the 2024 Fall Economic Statement is completely silent on this initiative.
“The Trudeau government has neglected to commit new funding for climate adaptation measures that would build resilience in the communities that are continually being hit hardest by severe weather events, including wildfires,” IBC says. “Instead, it has chosen to direct hundreds of millions in funding toward climate measures that will have no impact on protecting homes against floods and wildfires today.
“To exacerbate the problem, their new housing plan will also create new risks for communities and households for decades to come, by encouraging new building on flood plains and in other high-risk areas while giving no thought to building homes and infrastructure to withstand our current and changing climate.”
When it comes to climate change measures, the fall economic statement focuses mainly on mandatory climate-related financial disclosures, as well as the federal government’s ‘Green Bond’ program to raise money for clean growth and renewable energy, and its home energy retrofit program.
It remains to be seen what will happen to the flood insurance program, given the current political climate on Parliament Hill.
The Fall Parliament session recessed for the holidays in a state of upheaval, after Chrystia Freeland resigned as finance minister just before release of the economic statement. Her resignation has thrown up in the air the future of the federal government’s plans and programs prior to the next federal election, which can be held no later than October 2025.
CBC has reported the NDP, which has supported the Liberal minority government in three non-confidence motions thus far, may be willing to rescind support if Trudeau does not resign.
“NDP House leader Peter Julian told CBC News Network’s Power & Politics on Monday that if Trudeau hasn’t stepped down by February or March, the NDP will vote against the Liberals on a non-confidence motion,” the CBC reported Tuesday.
That would send Canadians to the polls earlier than expected in 2025.
Canadian Underwriter has repeatedly attempted to contact Conservative Party leader Pierre Poilievre’s parliamentary office to ask whether the Conservative Party of Canada would support the flood backstop if elected. CU has not heard back.
Feature image courtesy of iStock.com/Frank Armstrong
