Floods cause more property damage than any other hazard in Canada, and water-related losses now exceed fire and theft as the main source of property insurance claims. Public spending on flood relief has grown, and is projected to increase dramatically over the next decade, so governments have been changing their policies to reduce their financial exposure by shifting responsibility to homeowners. An implicit assumption of this policy shift is that individual homeowners must share greater responsibility for protecting their property by purchasing newly available flood insurance. Evidence is presented suggesting that consumer demand for flood insurance may be insufficient for economic viability. Low risk perception and a moral hazard created by government disaster assistance limit incentives for purchasing insurance.

  • Jason Thistlethwaite

    Jason Thistlethwaite is a CIGI fellow, as well as assistant professor in the School of Environment, Enterprise and Development in the Faculty of Environment at the University of Waterloo. His research focuses on the implications of the new environmental and climate change risks disclosure regime on the financial sector, and on recommendations to help align policy and industry’s resources toward an effective approach to mitigate climate change.