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Properties on Hatzic Lake are surrounded by high water after floodwaters began to recede, near Mission, B.C., on Dec. 5, 2021.DARRYL DYCK/The Canadian Press

Emergency Preparedness Minister Bill Blair says Ottawa will bring in a national insurance program over the next 18 months to provide coverage to the estimated 800,000 Canadian homes that are at such high risk of flooding that private insurance is unaffordable, or not available.

A new private-public insurance model is expected to be in place by next year, Mr. Blair said in an interview in British Columbia, where he was wrapping up a tour of communities damaged in November’s floods.

Climate change is fuelling more extreme weather, creating greater and more expensive flood risks across the country. Ottawa has been in talks with the insurance industry about a national plan for overland flood coverage since the 2013 floods in Calgary and High River, Alta. Those discussions gained a new urgency after storms across southern B.C. in November caused what could end up being Canada’s costliest natural disaster to date.

Mr. Blair is also talking to provincial and local governments about funding for reconstruction after natural disasters that would be tied, when needed, to relocating away from areas of acute risks.

Communities have had mixed success with relocation. Quebec faced a backlash in 2019 when it offered to buy out flood-damaged homes, leaving homeowners facing major financial losses. Fort McMurray, Alta., faced a similar challenge in 2020, encouraging homeowners to relocate rather than face new risks. The tepid response to a voluntary buyout plan following the 2013 floods forced local authorities to threaten tougher measures.

The highway that disappeared

Ottawa, as a key funder of disaster financial relief, is looking at ways to ensure that those funds are directed to smart reconstruction that fosters climate resilience.

“It is our intention to as quickly as possible – hopefully within the next 18 months – introduce a national flood insurance plan for the country,” Mr. Blair said. He met with members of the federal Task Force on Flood Insurance and Relocation last week, and is expecting an interim report before summer.

He said the insurance proposal is being worked out in tandem with a plan by the Department of Natural Resources to produce comprehensive flood mapping for the entire country.

“We’re going to be introducing what’s called a flood portal, so that every municipal and regional government will be able to determine, with a great deal of confidence, the flood mapping environment in which they may choose to build or rebuild,” Mr. Blair said.

Flooded fields in Abbotsford, B.C. on Nov. 23, 2021.Jackie Dives/The Globe and Mail

The federal government has been criticized for its outdated and incomplete flood data. Mr. Blair said communities should have accurate flood risk information to assess when relocation is a better option for residents at the highest risk of repeat flooding.

“It’s one of the reasons I came here to B.C.,” he said. On the weekend, he met with the mayors of three communities that were badly flooded in November – Abbotsford, Princeton and Merritt – to talk about how federal investments can influence thoughtful reconstruction.

“As they’re making local decisions as to where they can rebuild, and putting infrastructure back in place, it needs to be informed by the likelihood of future flooding events and other mitigation investments that we have to make,” he said. “Just continuing to rebuild in a flood plain, for example, and leaving that community vulnerable to future events, is not acceptable.”

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Pairing insurance protection with planned retreat is not a novel concept. In a 2020 policy paper, James Davies, an economics professor at the University of Western Ontario who specializes in disaster financing, warned that insurance schemes need to be designed to avoid reconstruction in high-risk areas.

“A concern with subsidizing insurance in high-risk areas is that the burden of the insurance premiums by itself will not be sufficient to induce optimal private mitigation in, or retreat from, those areas. Voluntary buyouts can compensate for this to an extent, but their low take-up rates in the past suggest they are not enough. Compulsory buyouts in some very high-risk areas are likely warranted,” he wrote.

A similar theme emerged in a recent report commissioned by Mr. Blair’s department from the Expert Panel on Disaster Resilience in a Changing Climate. “Avoiding exposure to hazards will become increasingly necessary in a changing climate. Forward-looking zoning and land-use planning, as well as carefully constructed planned retreat strategies, offer solutions for minimizing the exposure of populations and infrastructure,” the panel wrote.

Although the insurance industry expects to pay out $515-million in claims related to B.C.’s recent floods and mudslides that were triggered by extreme rainfall, at least half of the homes that were damaged were not eligible for insurance. By default, the federal and provincial governments end up, through disaster assistance plans, bailing out homeowners who have not been able to obtain private flood insurance.

Craig Stewart, the Insurance Bureau of Canada’s vice-president for federal affairs, welcomed Ottawa’s commitment to finally move forward with a national insurance plan.

“The insurance industry is ready to be a partner,” Mr. Stewart said Monday. There are four possible insurance models on the table, he said, but all involve some kind of government subsidy to make rates affordable.

Climate change is increasing the risks of ever greater disasters, and with that, the federal government’s financial exposure through its Disaster Financial Assistance Arrangements (DFAA) program is growing.

Ottawa has already committed $5-billion to B.C. as its share of the flood recovery costs. That unprecedented commitment from the DFAA for B.C. flood relief has provided an incentive for Ottawa to reform the funding formula. Academics have argued the funding program has created a disincentive for provincial and municipal governments to invest in necessary disaster mitigation efforts before catastrophes strike.

On Wednesday, Mr. Blair will meet with his provincial counterparts and he will raise the prospect of reforming the DFAA program, to put more emphasis on preventive measures. “I know that people will be concerned, but I’m not trying to take money out of it. I just want to make sure that we spend money wisely,” he said.

The B.C. floods have also pushed Ottawa to come to the table with funding for local flood infrastructure. Most dikes in B.C. fall under local government responsibility, and a majority of those dikes fail to meet provincial standards. Last November, the peak discharges of water through the Coldwater, Coquihalla, Tulameen, Similkameen and Cowichan rivers were the highest ever measured, and multiple dikes were breached.

“With the risk of potential future flooding events, there is, I think, some significant work that needs to get done on a priority basis to make the region more resilient,” Mr. Blair said. “Clearly, all three orders of government now have a responsibility to go back in and look at that recovery and rebuild. And we recognize our portion of that will be significant.”

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