Flood Insurance in Canada: Implications for Flood Management and Residential Vulnerability to Flood Hazards

Abstract

Insurance coverage of damage caused by overland flooding is currently not available to Canadian homeowners. As flood disaster losses and water damage claims both trend upward, insurers in Canada are considering offering residential flood coverage in order to properly underwrite the risk and extend their business. If private flood insurance is introduced in Canada, it will have implications for the current regime of public flood management and for residential vulnerability to flood hazards. This paper engages many of the competing issues surrounding the privatization of flood risk by addressing questions about whether flood insurance can be an effective tool in limiting exposure to the hazard and how it would exacerbate already unequal vulnerability. A case study investigates willingness to pay for flood insurance among residents in Metro Vancouver and how attitudes about insurance relate to other factors that determine residential vulnerability to flood hazards. Findings indicate that demand for flood insurance is part of a complex, dialectical set of determinants of vulnerability.

Potential Use of the Life Satisfaction Approach to Value Nonmarket Goods and Services

“…These individuals overestimate possible losses, and this limits their loss probabilities (Cha and Ellingwood 2012), especially when confronted by disasters that likely result to physical injuries. Risk averse decision makers avoid floods in many ways, such as: elevation (Botzen, Aerts, and Van den Bergh 2013); evacuation (Walch 2018;Lim, Lim, and Piantanakulchai 2016); and flood insurance (Cha and Ellingwood 2012;Lamond, Proverbs, and Hammond 2009;Oulahen 2015). Lazarus andFolkman (1984, as cited in Matthieu andIvanoff 2006) argue that "psychosocial stressor is cognitively interpreted along a continuum ranging from no harm to adversely affecting the individual's well-being."…”

Insurance and Climate Change Risk Management: Rescaling to Look Beyond the Horizon

“…The insurance industry's economic structure is also consistent with a vertical conceptualization of scale, such that local property owners purchase insurance through several regional or national primary insurers, who in turn transfer risk to a few global reinsurance companies. Indeed, ‘it is this ability to move capital across scales that allows the industry to manage risk’ (Oulahen, , p. 605). Premiums are pooled from distinct geographical areas that face variation in the scale of risk exposure and frequency (e.g.…”

The production of unequal vulnerability to flood hazards: A conceptual framework for hazards research in Canada's cities

“…Institutional arrangements, such as public policy or private market mechanisms, are found to be another important determinant of vulnerability. One institutional arrangement, for example, property insurance, and specifically overland flood insurance were it to become more widely available in Canada, would have implications for residential vulnerability (Oulahen ). The framework provides a lens through which to deconstruct the interaction of this institutional arrangement with the factors that influence vulnerability.…”