Flood Risk and Shared Responsibility in Canada: Operating on Flawed Assumptions?

CIGI Policy Brief No. 116

September 20, 2017

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.

About the Authors

Daniel Henstra is a former CIGI senior fellow and an associate professor of political science at the University of Waterloo.

Jason Thistlethwaite is a former CIGI senior fellow and an associate professor in the School of Environment, Enterprise and Development in the Faculty of Environment at the University of Waterloo.