Canadian Flood Risk Awareness Gap Threatens Insurer Exposure
Event summary
- A Léger survey commissioned by Intact Financial Corporation found that 62% of Canadians are not concerned about flooding, despite 80% of major Canadian cities being located on or near floodplains.
- Intact Insurance has launched a national flood prevention program, 'Keep It Intact,' providing homeowners with practical tips and resources.
- Jiffy, a partner of Intact, connects homeowners with vetted contractors for seasonal maintenance and resilience improvements, currently operating in six major Canadian cities.
- Intact Financial Corporation's annual operating Direct Premiums Written have tripled over the last decade, reaching $25 billion.
- 20% of Canadians cite difficulty securing reliable contractors as a barrier to taking flood prevention measures.
The big picture
The survey results reveal a significant gap between the reality of flood risk in Canada and public perception, creating a potential systemic vulnerability for insurers like Intact. This underscores the growing importance of proactive risk mitigation and public education in the face of climate change. Intact's investment in programs like 'Keep It Intact' and partnerships like Jiffy represent an attempt to address this challenge, but the scale of the awareness gap suggests a long-term effort will be required.
What we're watching
- Behavioral Shift
- The disconnect between perceived risk and actual flood exposure suggests a potential for significant claims events if public awareness doesn't improve, impacting Intact's loss ratios and potentially driving premium adjustments.
- Contractor Bottleneck
- The reliance on Jiffy and the identified difficulty in securing contractors highlights a potential constraint on the adoption of preventative measures, which could limit the effectiveness of Intact's 'Keep It Intact' program.
- Regulatory Response
- Increased frequency and severity of flood events may prompt stricter building codes and floodplain regulations, potentially increasing compliance costs for homeowners and impacting Intact's underwriting guidelines.
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