Water-related claims have surpassed fire losses as the number one cause of losses for many insurers in Canada. Losses from natural catastrophes, including severe weather, are on the rise around the world. Natural catastrophes have ranged between $10 billion and $50 billion a year internationally over the past decade 1. In 2013, floods in central Europe, northern India and Canada, in the month of June alone, caused upwards of $27 billion in flood-related losses. These weren’t the result of tropical storms, but rather torrential rainfall in highly populated areas.
1 Study by the Institute for Catastrophic Losses for the IBC , June 2012
Canadians are feeling the economic impact as a result of these catastrophic losses. The increased frequency and severity of extreme weather events translates into a significant increase in insured loss payouts. Flooding in Alberta in June 2013 cost insurers $1.7 billion, resulting in the worst natural disaster in Alberta’s history. Losses from the Toronto flash flooding, Ontario’s worst natural disaster and, according to the IBC, the third largest natural insured catastrophe in Canadian history, cost insurers roughly $940 million.
Fig. 1: Catastrophic event costs to Canadian Insurers
1999 = $1B
2010 = $1B
2011 = $1.7B
2012 = $1.19B
2013 = $3B
In coastal regions, a severe weather related event such as a hurricane, with its high winds and difference in pressure, can drive
ocean waters from the normal shoreline and cause flooding inland. On Canada’s west coast, a highly earthquake-prone region, seismic activity can trigger a tsunami or tidal wave. A tsunami’s waves can travel hundreds of kilometres and cause significant destruction to everything in their path.
In city areas, increased urbanization has a significant impact on the amount of run-off flowing into the streets. The increased flow leads to overland flooding as aging and inadequate infrastructure is unable to withstand the water volume Sewer back up almost always accompanies this type of flooding, especially in urban areas. In addition, snow melt, river floods, heavy rains, and thunderstorms are resulting in increasing water damage claims, even in areas outside of known flood plains.
The combination of increased extreme weather events, increasing urban density and aging infrastructure will only further compound the issue of increasing water damage claims. Ensuring you have the proper coverage for water-related losses is the first step in protecting yourself.
* Coverage is subject to policy terms, conditions and exclusions. Refer to your policy wording for details. Please note that coverage for Flood or Sewer back-up may not be available at all locations.