How brokers can help clients manage NatCat risks

With natural catastrophes (NatCats) now the norm in B.C., brokers don’t really have any opportunity to manage risk, says Julie Skelton, executive director and chief operating officer at Insurance Brokers Association of B.C. (IBABC).

“What brokers can do is educate their clients about how to mitigate risk,” she tells Canadian Underwriter in a recent interview. “Some people think a broker’s role is to find the best price. A broker’s role is really about advice, education, finding solutions, and educating clients to make informed buying decisions and know the challenges to placing risk in this province.”

She notes a recent IBABC conference focused on the ‘big if’ aftermath of an earthquake, the impact of cyber, and the impact of rising NatCats on capacity in the province.

“We focused on what we can do collectively as an industry; brokers, carriers, municipalities and government, to protect capacity and be able to find solutions for clients now and into the future,” she says. “Brokers have had a good run of being complacent around, ‘There’s always going to be a solution that I can find for a client.’ Now it’s to the point of, ‘What is it going to look like in the future to find solutions for clients?’ It’s not a given anymore.”

Reduced options from carriers 

Going forward, she says, overland water and flooding will continue to be among the largest challenges in B.C. “Looking at overland water and residential insurance, the carriers’ product offerings are not aligned,” she says. “It’s not a standard coverage. It is all these different iterations from groundwater, torrential rains, and other ways water comes into a home.”

The second major issue is flood mapping. She notes brokers who are dealing with five markets could have five different flood maps in the predictive modelling of the market.

“There’s no way a broker can say, ‘Oh, well, this carrier will always provide coverage for this risk in this area of the community.’ There’s no standardization. And it can change annually. It can change biannually,” Skelton tells CU.

“Predictive modelling is done by systems and processes that brokers can’t see. So, when a broker quoted for a client two months ago, it was fine, but it could be completely different if they quoted for them again today. The differences in product and the differences between flood maps makes the work of a broker more important and more challenging.

“This will continue until we get to a standard national flood map.”

Related: Flood following earthquake: Beware of a Cat soup in B.C.

Likewise, predictive modelling is now in place for wildfire peril.

“It used to be ‘fire is fire.’ But now markets are separating wildfire from that; they’re using wildfire data technology assessments and determining rates accordingly,” she says.

“For communities experiencing wildfire events, some carriers’ rates are so high it is clear they’re trying to lower their exposure in those areas. In other cases, some carriers will factor into their rating, ‘There’s no timber, there’s no risk, there’s no exposure,’ so they are going in, or staying in.”

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Meanwhile, Skelton calls earthquake “another challenge altogether.” While the peril tends to be an agreed-upon exposure, because there’s a single way to assess earthquake exposures – Natural Resources Canada’s national risk profile – there are challenges around deductibles.

“Earthquake deductibles used to be 5% of the total insurable value on a property. Now, in low-exposed zones, it’s at 10% to 15%,” she says. “But in earthquake zones, we see the massive 20% deductibles.

“For insureds, understanding that these 20% deductibles can be in the $200,000-plus range, based on the replacement cost values of properties today, the residential deductibles are then unmanageable for the average client. The industry is focusing on this issue along with stakeholders, brokers, markets, our national association and members of our B.C. government.” 

This article is excerpted from one that appeared in the August-September, 2025 print edition of Canadian Underwriter.

Phil Porado

Phil, an award-winning journalist with over 30 years of experience in financial topics, has been managing editor of Canadian Underwriter for more than three years.