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