As the climate changes, extreme weather events and natural disasters are becoming more frequent and severe. Large-scale, once-in-a-century catastrophic events now occur in the span of decades, profoundly impacting Canadians who are largely underprepared and uninsured.

The alarm bells are ringing

The role of insurers is to assess, mitigate, and price risk appropriately. Beneath our complex actuarial calculations, the equation is relatively simple: as the risk of damage increases, so too will the cost of insurance. Rising premiums are an alarm bell that signals more needs to be done to prepare for extreme weather by building more risk-adapted communities.

The price tag of these rapid changes is steep. Up until 2008, the Canadian insurance industry saw an average of $400 million in claims payouts per year due to extreme weather, largely attributed to flooding. Since 2008, those losses have more than doubled, exceeding an average of $1 billion per year. Of course, this only accounts for insured losses. Disaster relief payments from the government are also on the rise, and ripple effects like impacts to mental and physical health, lost earnings, and damages to the environment render the real costs both immeasurable and immense.

Partnering for change

The effort to build resilient communities must occur on a scale that dwarfs the biggest and boldest actions of any single company, sector, or government. Extreme weather is a highly complex, multigenerational challenge that will profoundly impact the environmental, social, and financial well-being of communities across Canada and around the world. Because of this, building stronger, safer communities requires a collaborative and cross-sector approach.

As a co-operative insurer, we’re guided by a concern for community and driven to be a catalyst for sustainability. We are an active participant alongside governments, businesses, researchers, and clients to mitigate risk, ensuring communities are better prepared and protected when disaster strikes.

Informing communities

To encourage resilient community building, Canadians must first be made aware of their increasing levels of risk. Yet our research shows that the vast majority who live in high-risk areas simply do not know that they are vulnerable to catastrophe.

In 2016, the University of Waterloo’s Partners for Action (P4A), an applied research network of which The Co-operators is a founding donor, assessed Canadians’ level of preparedness for flood. This national survey engaged 2,300 Canadians who reside in flood-prone areas. Ninety-four percent of this high-risk group did not believe that they were at risk and/or were not aware. Without this knowledge, it is unlikely that they will make the decision to protect themselves against a major flood event.

Taking action

There are relatively simple steps Canadians can take to minimize property damage from extreme weather and natural disasters. Fire and flood-resilient landscaping practices, building retrofits, and weatherproofing can go a long way to minimize damage and costs.

At the same time, governments should invest in infrastructure that can withstand the increase in severity of extreme weather and natural disasters, and plan for the increased risks associated with a changing climate.

As insurers, it is our responsibility to inform clients about the risks they face, the steps that they can take to minimize those risks, and the products that are available to protect their financial security.

Advocating for change

To ensure that messages of resilience hit home, we’re working in partnership with a variety of stakeholders to raise awareness and inform Canadians about how they can mitigate extreme weather-related risk.

While we innovate products to offer more comprehensive coverage, conversations are underway around building better resilience — we have a lot of ground to gain to protect the financial security of Canadians over the long term.

By working together, and ensuring that Canadians are well informed, educated and ready to take action to mitigate risks, we will build resilient, sustainable, and risk-ready communities for tomorrow.