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Adaptation toClimate Change
Robert TremblayDirector, Research
Insurance Bureau of Canada
APEGGAEdmonton
April 15, 2010
2
Who is IBC?
Trade association representing Canada’s private home, car and business insurance companies
Over 200 Companies $25 billion in claims paid
3
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)
4
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
5
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