Ottawa looks to launch national flood insurance program within 12 months

People stand at the edge of floodwater as vehicles are seen abandoned in water following a major rain event in Halifax on Saturday, July 22, 2023.

The federal government says the plan is to implement a long-promised national flood insurance program sometime next year, setting aside $15 million in the 2025-26 fiscal year in Tuesday’s budget.

“This is part of a much wider plan, one where we’re looking at how do we do proper mitigation as well,” Emergency Preparedness Minister Harjit Sajjan said before the Liberal caucus meeting Wednesday.

He pointed to cases where flood risk data was not available in the past or where risks have changed, but people have already bought or built homes in areas now under threat and face significant or impossible costs to insure their homes in case of flooding.

“We want to make sure that they are supported. But at the same time, where there is flooding, that we don’t start building on places where there’s going to be a potential flooding as well,” he said.

As part of the plans for a national flood insurance program, the federal government is working with the provinces and territories to produce updated flood mapping of the country.

This mapping will be essential in determining what existing properties exist in hard-to-insure, high-risk areas. Ottawa aims to work with the provinces and territories on finding ways to subsidize these future insurance policies and offer low-cost flood insurance within the next 12 months.

The program will be run through a subsidiary of the Canada Mortgage and Housing Corporation (CMHC), the budget document said.

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“(Tuesday’s) commitment by the federal government will help ensure that over 1.5 million homeowners at high risk of flooding will have access to affordable insurance through the National Flood Insurance Program when it’s launched next year,” Insurance Bureau of Canada president and CEO Celyeste Power said in a statement.

“This is the single most important step Canada can take to better protect homeowners across the country from the financial risks of climate change that they are already facing.”

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According to Power, the goal of the national flood insurance program is to have it worked in with regular home insurance policies that people can purchase through standard providers.

The government initiated a task force to start the work on creating this insurance program in November 2022, involving provincial and territorial officials plus representatives from the insurance industry.

That task force’s 2022 report pegged the flood insurance risk at $2.9 billion annually, with 89 per cent of that cost concentrated around the top 10 per cent of high-risk homes. Just over one-third of the insurance risk is centred around the top one per cent of high-flood-risk homes.

Power adds that the eligibility requirements of the future program should discourage construction in flood plains, while incenting the protection of homes that already exist in these areas.

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Climate change continues to make predicting floods challenging, and even with lower levels of snow in parts of the country this winter, Sajjan says he is still concerned about flood risks.

“I’m kind of worried about northern Ontario and south of Quebec right now, as flash flooding is becoming a significant concern,” he said.

To go along with this, the budget proposes putting $6.9 million over the next five years into enhancing the Meteorological Service of Canada’s early warning system, with a focus on floods and storm surges.