Insurance execs call on governments for better flood risk information

As Albertans deal with flood losses possibly exceeding the costs of the 2011 Slave Lake fires, insurance executives are calling on governments to provide better information to the Canadian industry.

“This is going to be very catastrophic,” Patrick Lundy, president and CEO of Zurich Canada, said of the floods, which inundated part of central Calgary and damaged the Scotiabank Saddledome, home of the Flames hockey team.

“When you evacuate 100,000 people from a city you are going to have business interruption, you’re going to have flood” claims, he said.

Lundy made his remarks during a panel discussion at the Canadian Commercial Insurance Summit (CCIS) Tuesday in the Township of Muskoka Lakes, Ont.

As of Monday, there were 23 states of emergency in effect in southern Alberta and a mandatory evacuation order was in effect for High River, about 50 kilometres south of Calgary.

Three thousand kilometres to the east, the Alberta flood disaster was on the minds of insurance professionals gathered at CCIS, produced by MSA Research.

“We have to be thinking more about flood resilience, climate change more than ever,” Lundy said. “There’s got to be government involvement – not in insuring – but in better research and development and also better information.”

His co-panelist, Lynn Oldfield, agreed, noting that in the U.S., the Federal Emergency Management Agency (FEMA) provides flood data which allows “predictive modelling to be very, very sophisticated.”

“We watch the U.S. data with envy,” said Oldfield, president and CEO of American International Group (AIG) Inc.’s Canadian subsidiary. “We’re cobbling it together in this country, folks. We’ve got reinsurers, thank goodness, who have very well developed models and some catastrophic climate scientists – we rely on their data, we rely in their site surveys, we get our engineers out to take a look but we need to do a much much better job of mapping it. I think there’s a role for the government to play.”

Published reports quoted Alberta Premier Alison Redford as saying losses from the floods could be worse than the 2011 fires in Slave Lake. That catastrophe, according to Property and Casualty Insurance Compensation Corp., was the second costliest natural disaster in Canadian history, with about $700 million in insured losses.

The disaster with the highest value of insured losses, at $1.295 billion, had been the 1998 ice storm affecting eastern Ontario and Quebec, according to the PCICC report titled “Why Insurers Fail: Natural Disasters and Catastrophes,” released in April.