Flood insurance risks in Canada

The document examines the challenges of flood insurance in Canada, where approximately 1.5 million high-risk homes lack affordable coverage. It argues that while a proposed federal low-cost insurance program could provide a necessary safety net, it must be integrated into a broader resilience strategy to avoid 'moral hazard' and financial instability. The author recommends specific design measures—such as excluding new builds, phasing in risk-based premiums, and incentivizing mitigation—alongside government restrictions on floodplain development and improved risk disclosure in real estate.

• Approximately 10% of Canadian households live in high-risk flood areas and find it nearly impossible to obtain affordable insurance, as private companies avoid these areas due to high payout costs. This leaves about 1.5 million homes uninsured, meaning homeowners must pay out of pocket or rely on government disaster assistance.
• Public Safety Canada and a federal task force estimate that 90% of Canada's average annual flood damage, totaling $2.9 billion, is concentrated within the 10% of homes most at risk.
• A low-cost public insurance program risks creating a 'moral hazard' where homeowners and local governments underestimate flood risks and continue building on floodplains. The document cites a similar US program as a cautionary example, noting it owed the Treasury US$20.5 billion by the end of 2022 due to low premiums and rising payouts.
• To ensure viability, the proposed insurance program should incorporate three specific design measures: covering only homes built before the program's inception, transitioning toward risk-based premiums over time (with support for low-income households), and offering premium reductions for implementing flood resilience measures.
• Insurance alone is insufficient for resilience; it must be paired with comprehensive strategies, including restricting floodplain development, improving urban drainage, requiring flood risk disclosure during real estate transactions, and updating disaster financial assistance policies.

APA

Canadian Climate Institute (2024). Flood insurance risks in Canada. https://climateinstitute.ca/flood-insurance-risks-canada/

Chicago

Canadian Climate Institute. Flood insurance risks in Canada. 2024. https://climateinstitute.ca/flood-insurance-risks-canada/.

Wikipedia

{{cite report |author=Canadian Climate Institute |title=Flood insurance risks in Canada |date=18 March 2024 |url=https://climateinstitute.ca/flood-insurance-risks-canada/ |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{canadianclimateinstitute2024flood, author = {{Canadian Climate Institute}}, title = {{Flood insurance risks in Canada}}, institution = {Canadian Climate Institute}, year = {2024}, month = mar, url = {https://climateinstitute.ca/flood-insurance-risks-canada/}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }