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Adaptation to Climate Change

Adaptation to Climate Change. Robert Tremblay Director, Research Insurance Bureau of Canada APEGGA Edmonton April 15, 2010. Who is IBC?. Trade association representing Canada’s private home, car and business insurance companies Over 200 Companies $25 billion in claims paid.

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Adaptation to Climate Change

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  1. Adaptation to Climate Change Robert Tremblay Director, Research Insurance Bureau of Canada APEGGA Edmonton 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

  6. Climate Change: Industry’s Challenge Why? • More severe weather more frequently • Mid-to-long term issues of availability and affordability of insurance

  7. Background: Largest insurance disasters Source: ICLR

  8. 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

  9. 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)

  10. 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

  11. 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

  12. 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

  13. Adaptation and governments • Municipal governments • Starts at local level • Provincial governments • Must provide guidance, resources • Federal government • Leadership, resources, tools

  14. 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.

  15. 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

  16. 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

  17. Insurance Research Lab for Better Homes UWO Real size home to study impact of wind loads on structures and components

  18. 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

  19. Public Education Community outreach programs Educate home owner how they can act Backflow valves Landscaping Rain barrels

  20. Tools/Research/Knowledge Transfer • Updated IDF curves • Downscaled Climatic maps • Building code revisions • Need for interim engineering guidance

  21. 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

  22. 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

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