Adaptation to Climate Change Robert Tremblay Director, Research Insurance Bureau of Canada APEGGA...

Adaptation toClimate Change

Robert TremblayDirector, Research

Insurance Bureau of Canada

APEGGAEdmonton

April 15, 2010

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Who is IBC?

Trade association representing Canada’s private home, car and business insurance companies

Over 200 Companies $25 billion in claims paid

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The business of insurance

Risk management tool to protect assets for sudden and unforeseen events

Cover residential, car and businesses Spread the financial risk Players:

Primary insurers (domestic) Re-insurers (international)

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Role of insurance

Provides vital underpinning to society and to economic growth.

Enables individuals & businesses to take decisions without fear of extreme financial losses from relatively low probability events

Induces individual and businesses to take more intelligent risks without burdening governments and society

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What Canadian insurers covers…

Homes Fire, theft, vandalism, wind damage, Sewer back-ups

Businesses Business interruption Production means and premises Floods

Liability Insurance Municipal Professional, commercial

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Climate Change: Industry’s Challenge

Why?

More severe weather more frequently

Mid-to-long term issues of availability and affordability of insurance

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Background: Largest insurance disasters

Source: ICLR

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Background

Examples of Canadian weather-related events

Saguenay floods (1996) $1.5 billion Ice Storm (1998) $1.6 billion B.C. Wild Fires (2003) $200 million Peterborough floods(2004) $ 90 million Toronto rains (2005) $500 million Hamilton-Ottawa rains (2009) $200 million

Alberta winds (2009) $300 million Vaughn tornadoes (2009) $ 80 million

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Background

Infrastructure/structure failure often the trigger Saguenay Floods (dams) Ice Storm (electric grid) Peterborough (sewer/surface water

systems) Toronto (sewer/surface water systems) Ottawa/Hamilton (sewer/surface water) Alberta wind (wind loads)

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Background

August ’05 Toronto rains $500 million in sewer back-up claims

More basements are finished Value of contents much higher than before High density of dwellings

July ’09 Hamilton-Ottawa rains 6,000 homes Hamilton 1,400 homes Ottawa More than $200 million

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Background

In all cases… Insurance played its role Claims were paid promptly Economic hardships were avoided Lives went back to normal Economy could continue to grow

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Adaptation: Key Element

Insurance Industry Consensus: Climate change is most important public

policy issue facing Canada today Dialogue must shift to include adaptation

efforts P&C insurance industry has an

opportunity to contribute significantly the adaptation discussion

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Adaptation and governments

Municipal governments Starts at local level

Provincial governments Must provide guidance,

resources Federal government

Leadership, resources, tools

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Adaptation: Help municipalities

Develop Municipal Risk Assessment Tool Quantify the risk of infrastructure

failure Both current and future climatic

patterns how much rain, where, and when.

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Risk Assessment Tool

Builds on Work done by PIEVC Top down VS bottom-up Watershed-system design-operation Actual capacity Designed as a quick diagnosis not a

prescriptive solution

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Watershed Awards

Need to reward raise awareness of things that are well done!

New National Award to recognize municipalities, IBC/FCM partnership 5 regional awards, 1 national Recognition in regional daily a national

daily for national winner

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Insurance Research Lab for Better Homes

UWO Real size home to study impact of

wind loads on structures and components

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Need for dialogue

Too late to bury head in sand Preaching to the choir… Assessment tool brings the need to

discuss: Performance standards “Acceptable risk” Need to broaden stakeholders

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Public Education

Community outreach programs Educate home owner how they can act

Backflow valves Landscaping Rain barrels

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Tools/Research/Knowledge Transfer

Updated IDF curves Downscaled Climatic maps Building code revisions Need for interim engineering

guidance

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Why do we care about the weather?

Water claims – creating cost pressures ($1.3 billion annually)

Reduced claims costs = available & affordable insurance

It is our business Help Canadians stay safe – they

want us to

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Conclusion

In conclusion… Moral duty to ensure Canadians protected Mitigate damage through adaptation

measures Homes protected, communities more resilient. Nothing new

Insurance industry can be catalyst for adaptation