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Regulators Push for Canadians to be More Prepared – and Insured – for Natural Catastrophes

Report by the Canadian Council of Insurance Regulators

Toronto, ON (Aug. 9, 2017) – Today the Canadian Council of Insurance Regulators (CCIR) published the results of its analysis of natural catastrophes and personal property insurance in Canada. The Findings Report & Position Paper: Natural Catastrophes and Personal Property Insurance covers a number of critical issues, including risk modelling, risk sharing, coverages that are available for natural catastrophes in Canada and the consumer’s awareness of the risks of loss from such events and insurance coverage for them.

The CCIR sought to better understand how the increasing frequency and severity of actual or potential natural catastrophes are affecting the insurance market and consumers.  The study looked at policy wordings, the types of coverages that are currently available, the impact natural catastrophes are having on consumer awareness and other changes taking place in the insurance marketplace.

“Natural catastrophes are becoming a more regular part of our lives,” Patrick Déry, Chair of the CCIR, explained. “We witnessed the costliest natural catastrophe in Canadian history with the fires in Fort McMurray last year and this spring we saw extensive flooding in a number of regions across the country. And we can only expect losses from natural catastrophes to continue.”

The CCIR concluded it study of the issues with a number of general observations as well as expectations specific for the insurance industry. Chief among these is the scope of the issue. “Natural catastrophes affect us all,” Mr. Déry stated. “To ensure that we are adequately prepared requires action from multiple stakeholders: all levels of government, regulators, private enterprise, academia, the insurance industry, insurance consumers and home owners.”

In particular, Findings Report & Position Paper: Natural Catastrophes and Personal Property Insurance addresses concerns with financial literacy and the lack of understanding of the risks and insurance options for natural catastrophes among consumers. The CCIR expects the insurance industry to do more to increase consumer awareness of the risks and understanding of the insurance coverage they have or is available. In addition, as part of its strategic plan for 2017-2020, the CCIR will engage in efforts to broaden insurance consumers’ understanding of the issues related to natural catastrophes.

Further information on the CCIR and its work on natural catastrophes and personal property insurance is available on the CCIR’s website.

View the report or keep reading for a preview of the introduction.

Natural Catastrophes and Personal Property Insurance

The CCIR committed to a review of natural catastrophes and personal property insurance as the frequency, severity, costs and attention paid to natural catastrophes have risen both across Canada and around the world. The objectives of the CCIR in this area were to assess and better understand the impact of natural catastrophes on insurance and insurance consumers in Canada, with particular attention being paid to the types of coverage and availability of insurance for natural catastrophes, the changes taking place in the insurance marketplace, and the effects the rise in natural catastrophes has had on consumer awareness of risks and coverages.

Natural catastrophes generally garner widespread attention at the time of the event and during the initial stages of recovery. However, there is a continuous cycle of activity before, during and after the event. The key segments of this cycle include risk identification and assessment, raising risk awareness, risk transfer, risk mitigation, preparedness, recovery, reassessment and remediation efforts. Each segment affects and involves a variety of stakeholders, including consumers, academia, the insurance industry, private enterprise, emergency services and all three levels of government. The interests of the CCIR and its members are primarily focused on the role, impact and activities of insurers, insurance consumers and the insurance regulatory framework throughout this cycle.

Following research and a review of property insurance policy wordings, the CCIR published for consultation its Issue Paper in July 2016.

The purpose of this paper is to present the results and findings of the consultation on the Issues Paper and to outline the positions and expectations of the CCIR as they relate to the issues regarding natural catastrophes and personal property insurance.

Sections of the report address:

  • Risk Modelling
  • Risk Sharing
  • Climate Change
  • Coverages for Natural Catastrophe in the Personal Property Insurance Market
  • Consumer Awareness and Communications
  • Other
  • Conclusion

Read the full CCIR report.

About CCIR

The Canadian Council of Insurance Regulators is a national association of insurance regulators that traces its roots back to 1914. The mandate of the CCIR is to enhance insurance supervision and regulation to serve the public interest and to foster increased cooperative supervision and information sharing among regulatory authorities. For more information, visit https://www.ccir-ccrra.org.

Source: Canadian Council of Insurance Regulators (CCIR)

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