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Governments must be more resilient to natural disasters
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Governments must be more resilient to natural disasters

A group of men, all wearing face masks, examine a large map on a table


The massive floods that swept through British ColumbiaThe devastation natural disasters can cause in Canada was demonstrated in November 2021. In Canada, it was rare to have more than $1 million in annual insured losses due to natural disasters. But now, $3 billion is not uncommon.

Canada is likely to become more stormy, wetter and warmer. It will also experience more severe connective thunderstorms and wildfires. According to the Insurance Institute of Canada, annual insured losses will increase by 5%. Potentially, it could reach $5 billionWithin the next 10 years.

Private insurance is an important part of community resilience by providing financial compensation for loss that aids in recovery. Munich Re is an insurance companyNotes that countries with higher levels of insurance coverage are more likely to be affected by natural disasters, even after taking into account per capita income.

Insurance is best for protecting communities and households against idiosyncratic low frequency, high-severity weather events. Insurance alone cannot protect Canadians from extreme weather events, which are becoming more common. It is vital that a holistic, integrated approach is taken to managing and mitigating losses from natural catastrophes.

CommunitiesAnd Property ownersPartners are needed to reduce losses by taking part in mitigation activities to lower the severity of wildfire, wind, and water events. To protect Canadians from the devastating effects of weather events, the greatest responsibility lies with all levels of government.

Land-use planning and mitigation

To make communities more resilient, governments must invest in mitigation and adaptation activities as well as risk-prevention activities. Climate change, increased development, and population growth have all led to the need for updated risk assessments, including flood maps, and for more accurate flood maps.

A group of men, all wearing face masks, examine a large map on a table
Justin Trudeau, Prime Minster, looks at maps while he examines the damage that flood waters have caused to Abbotsford in B.C. November 2021. To build communities that are more resilient against natural disasters, the government must invest in risk prevention activities.

Future development should be prohibited in high-risk zones. Governments should also buy out existing properties. Better flood mapsGovernments will be able to purchase high-risk property before a devastating flood. The land could also be transformed to help reduce flooding in the surrounding areas.

Building codes and standards must be updated to ensure that they can withstand extreme weather events in the future. Whether it’s new construction of buildings or infrastructure, retrofitting property or repairing property after a loss, building codes need to be forward-looking.

Financial assistance in the event of a disaster or insurance

A province or territory can declare an extreme weather-related event eligible for disaster aid. The province will provide funding. Disaster Financial Assistance (DFA).. DFA is available to property owners and communities for losses that are not covered by insurance companies — DFA does not pay for losses for which insurance is “reasonably and readily” available.

Canadian homeowners were unable to purchase insurance for water damage from the land prior to the flooding events in Calgary and Toronto in 2013. Most insurers offer flood insurance.Except in high-risk areas, yes

This introduces inequity among homeowners — those who live in the highest risk areas cannot purchase insurance and therefore can receive DFA after a loss, but those living in moderate to high-risk areas where insurance is “reasonably and readily” available may not be able to afford coverage and therefore not be eligible to receive DFA.

A pair of legs sticking out of a car sitting in the middle of a flooded highway
A woman in Toronto gets back into her flooded car at Lakeshore Boulevard in July 2013. Insurance companies now offer overland flood insurance in response to the floods of 2013.

Because the term “reasonably and readily” is not well-defined, ambiguity exists regarding who can receive DFA and who cannot. If the limitations around DFA are not fully understood by property owners, or if governments do not clearly define “reasonably and readily,” the incentive to purchase flood insurance is reduced.

Information is essential for property owners Information about flood insuranceInsurers can offer valuable information about how to reduce flooding losses.

Additionally, owners must be advised about the consequences of not purchasing flood insurance. Furthermore, the provincial and territorial governments should not pay DFA for any losses that could have been covered.

Private-public partnerships

Although the private insurance market plays an important role in financing losses due to natural disasters, it has its limitations. Some properties have higher risks than the insurance market can handle, and some perils could cause large losses that the Canadian insurance market cannot cover.

To ensure flood insurance coverage is sustainable A public-private partnership is needed, whereby the government’s role is to support an Insurance risk-sharing poolFor high-risk properties that otherwise would not be eligible for coverage. This will reduce DFA dependency and provide homeowners with information about the risk they face.

A man walking through knee-high water. In the background, a large truck and the front of a building are submerged in the water.
In November 2021, a man walks through rising floodwaters as he crosses into Canada from the United States at Abbotsford (B.C.).

In providing safety nets for large losses, the government plays an important role. The Property and Casualty Insurance Compensation Corporation (the industry guaranty funds)It has been determined that a catastrophic loss exceeding $35Billion in insured losses would result The Canadian insurance industry is overwhelmedGovernment intervention is required. This intervention could include providing insurance coverage for catastrophic losses, as well as liquidity or solvency backingstops.

Insurance and adaptation will not solve severe weather loss problems. To reduce the severity and frequency, we need to take firm and sincere actions on climate change. Some of the tools discussed here — insurance, strengthening building codes, effective mitigation and creating public private partnerships — can be leveraged to build a more resilient society.


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