Options for managing flood costs of Canada’s highest risk residential properties
Every year, thousands of Canadians experience financial losses due to severe weather. The losses to insurers and their policyholders and losses to governments and, by extension, taxpayers are escalating.
This paper considers the views of both the private and the public spheres of society, and focuses primarily on measures to transfer residential property risk from public sector disaster financial assistance programs, which are funded by the taxpayer, to private sector insurance solutions, which are primarily funded by the property owner. The paper explores three potential insurance options, including a pure market approach like that used in Germany and Australia, where private insurance is the primary means of protection and governments scale back disaster assistance; an approach where insurance and government disaster assistance exist together and are better coordinated; and one where a high-risk insurance pool is introduced for properties that would not otherwise be able to access private insurance.
These options are based on a suite of commonly agreed principles. Taken together, the principles are designed to promote community and individual resiliency while decreasing pressure on public finances.
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