Adaptation to Climate Change

Robert TremblayDirector, Research

Insurance Bureau of Canada

RIMS ConferenceSeptember 14, 2009 – St-John’s

Newfoundland.&Labrador

Insurance industry in Canada

• Over 200 Companies • $20 billion in claims paid• Players:

– Primary insurers (domestic)– Re-insurers (domestic & international)

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

Climate Change: Industry’s Challenge

Why?

• More severe weather more frequently

• Mid-to-long term issues of availability and affordability of insurance

Background:Largest insurance disasters

Source: ICLR

Canada’s costliest disasters

Event and year Infrastructure Failure

Insured Loss

Saguenay floods (1996)

Dams $1.5 billion

Ice Storm (1998) Electric grid $1.6 billion

B.C. Wild Fires (2003) n/a $200 million

Peterborough floods (2004)

Sewer/surfacewater systems

$90 million

Toronto rains (2005) Sewer/surfacewater systems

$500 million

Contributing factor to water losses

• Municipal infrastructure performance failures

• More basements are finished• Value of contents much higher than

before• High density of dwellings

Water losses more important than fire

At least $1.5 billion/year in claims

• Water losses 2 sources:– Mechanical breaks in home/building

equipment– Municipal infrastructure failures

Insurance catalyst for adaptation?

• Important to price risk properly

• Which can be the trigger for infrastructure and adaptation behavior

Adaptation: Help municipalities

• Develop prospective Municipal Risk Assessment Tool– Key indicators of likelihood of

infrastructure failure– Risk analysis of each indicator– Future climatic models to determine

how much rain, where, and when

Risk Assessment Tool

• Builds on work done by PIEVC• Top down vs. bottom-up• System design vs. actual capacity• Integrates Operational Best Practices• Designed as a quick diagnosis not a

prescriptive solution

Need for dialogue

• Too late to bury head in sand• Preaching to the choir…• Assessment tool brings the need to

discuss:– Performance standards (service levels)– “Acceptable risk”– Need to broaden stakeholders

Need Tools

• Updated IDF curves• Downscaled climatic maps• Still not an excuse for inaction, need

for interim engineering guidance

Other complementary approaches

• True pricing of potable/waste water services

• Building codes• Adapting dwellings (back flow valves)• Reduce water run-offs

– Rain barrels– Permeable driveways– Low impact urban development

Conclusion

In conclusion

• Moral duty to ensure Canadians protected

• Mitigate damage through adaptation measures

Communities more resilient

• Sense of urgency