The expansion of property insurance has been identified as a key strategy for strengthening pre- and post-disaster management. Insurance can take some of the financial responsibility of disaster recovery away from governments, and the use of risk-adjusted premiums provide incentives for communities and individuals to adopt risk-averse behaviour. The viability and sustainability of insurance in coastal areas are put into question due to increasing exposures resulting from climate change impacts and the current fragmented policy approach to disaster management. Bridging mechanisms that improve coordination across governments and insurers, in addition to a stronger role for the federal government in managing climate change risk, are necessary to improve the viability of insurance in coastal regions. The objective of this policy brief is to assess the viability of private flood insurance in Canadian coastal communities and to identify measures necessary to expand the role of insurance as a source of disaster management in the era of climate change. The findings from this brief can be used to inform policy supporting insurability in other vulnerable communities.
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.