Ottawa looks to launch national flood insurance program within 12 months

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The federal government says the plan is to implement a long-promised national flood insurance program sometime next year, setting aside $15 million in the 2025-26 fiscal year in Tuesday’s budget.

“This is part of a much wider plan, one where we’re looking at how do we do proper mitigation as well,” Emergency Preparedness Minister Harjit Sajjan said before the Liberal caucus meeting Wednesday.

He pointed to cases where flood risk data was not available in the past or where risks have changed, but people have already bought or built homes in areas now under threat and face significant or impossible costs to insure their homes in case of flooding.

“We want to make sure that they are supported. But at the same time, where there is flooding, that we don’t start building on places where there’s going to be a potential flooding as well,” he said.

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As part of the plans for a national flood insurance program, the federal government is working with the provinces and territories to produce updated flood mapping of the country.

This mapping will be essential in determining what existing properties exist in hard-to-insure, high-risk areas. Ottawa aims to work with the provinces and territories on finding ways to subsidize these future insurance policies and offer low-cost flood insurance within the next 12 months.

The program will be run through a subsidiary of the Canada Mortgage and Housing Corporation (CMHC), the budget document said.

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“So we’re glad that the budget spelled out, finally, the timeline that the end is near. We’re actually going to have flood insurance available to those about 1.5 million homeowners across the country by ideally next summer,” Insurance Bureau of Canada (IBC) vice president Craig Stewart said in an interview with Global News.

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“However, as an industry we’re watching to see if the program gets adequately funded. The budget didn’t spell out and provide a lot of funding for it, and that’s going to be needed if the program’s going to be operation.”



Without subsidies, Stewart estimates insurance rates for homes in high-risk flood zones would be $2,000 to $5,000 annually if policies existed – something he says would be out of reach for lower income households.

The government initiated a task force to start the work on creating this insurance program in November 2022, involving provincial and territorial officials plus representatives from the insurance industry.

That task force’s 2022 report pegged the flood insurance risk at $2.9 billion annually, with 89 per cent of that cost concentrated around the top 10 per cent of high-risk homes. Just over one-third of the insurance risk is centred around the top one per cent of high-flood-risk homes.

“Right now, the federal government spending about $700 million a year in taxpayer money to bail out homes that are already built and in high risk zones. These are homes that are not insurable through the private market, and we need a replacement for those taxpayer funded bail outs,” Stewart said.

Stewart added that once the program is up and running, the goal is to have the flood insurance available through people’s regular insurance brokers.

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Climate change continues to make predicting floods challenging, and even with lower levels of snow in parts of the country this winter, Sajjan says he is still concerned about flood risks.

“I’m kind of worried about northern Ontario and south of Quebec right now, as flash flooding is becoming a significant concern,” he said.

To go along with this, the budget proposes putting $6.9 million over the next five years into enhancing the Meteorological Service of Canada’s early warning system, with a focus on floods and storm surges.

Stewart said that people living in low-risk areas that are hit by flash floods can access the necessary insurance already, but for people in high risk areas the national program would be needed for residents to be insured.

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