By the time Hurricane Fiona struck the coast of Atlantic Canada, wind speeds were well above 100 km/h and the rain was pouring so hard you couldn’t see through it. As the storm moved north along the coast, touching down in PEI, Nova Scotia, Newfoundland, and sections of Eastern Quebec and New Brunswick, houses were flattened, trees were uprooted and toppled across roadways, ocean waves devoured the coastline, and lives were lost.
At an estimated $660 million in insured damage, Hurricane Fiona is the most expensive weather event to ever hit the east coast, and the tenth most expensive in Canadian history, according to the Insurance Bureau of Canada.
But a handful of cottagers in PEI and Nova Scotia aren’t included in this insured damage data. That’s because most Canadian insurance companies don’t cover damages caused by storm surge—when the ocean rises above its predicted level.
With the climate changing so quickly, the risk modeling needed to develop prices for coastal flood coverage is highly complex. Without accurate risk modeling, the risk is deemed too high to make the coverage affordable and available, the Insurance Bureau of Canada says.
This means that many of the Atlantic Canada cottagers whose properties were swept away by ocean waves will have to pay out of pocket to rebuild.
A Guelph-based insurance company is trying to change this. In 2015, after watching floods ravage properties in both Calgary and Toronto, Co-operators Insurance introduced its Comprehensive Water coverage.
“We saw that there was an unmet need, and we felt compelled to offer a flood coverage that was more comprehensive and available to all Canadians, regardless of their risk,” says Michelle Laidlaw, Co-operator’s assistant vice president of national product portfolio. “What we’ve seen is that incidents of extreme weather, like flooding, in our country have become more sudden, more frequent, and more severe. This is a cost to Canadians, and we expect this trend to continue as we face a climate crisis.”
Co-operators launched its Comprehensive Water coverage in Alberta in May 2015. It’s since introduced the coverage across the country, making it available to Atlantic Canada in 2018.
The company’s Comprehensive Water coverage protects against storm surge, waves and spray caused by a hurricane or storm, flooding from a natural or man-made body of water, such as a pond or river, flooding from heavy rainfall or snowmelt, sewage, and septic backups, and a rising water table.
It’s not an easy insurance product to provide, Laidlaw admits. With the climate crisis accelerating, the way the company calculates risk and premiums is always changing. “It’s a risk-based pricing model,” she says. “What that means is that some clients who are in higher-risk areas will have a higher cost. So, premiums are based on the client’s specific needs and the risks associated with their property.”
When calculating premiums, the company looks at a complex list of factors, including a property’s proximity to water, its flooding history, its elevation, soil type, and whether it has a loss prevention device, such as a sump pump. Premiums are specific to a customer, meaning someone in a high-risk zone could pay thousands of dollars a year, while someone in a low-risk zone could pay hundreds.
The insurance covers all types of properties, including cottages, regardless of whether the inhabitant owns or rents. According to Laidlaw, 60 per cent of Co-operators’ Atlantic Canada clients have purchased Comprehensive Water insurance. The company is the third largest insurer in Atlantic Canada, accounting for 11 per cent of the market share.
Co-operators’ claims team is on the ground in Atlantic Canada, working to provide support to its clients by processing claims as quickly as possible, including damage caused by storm surge.
“We continue to educate and promote this product in Atlantic Canada and across the nation. We are encouraging our clients to take this product and to be aware of their flood risks,” Laidlaw says. “We know it’s significantly changing the landscape of where Canadians choose to live.”