Federal Government Announces Funding For A Low-Cost National Flood Insurance Program

• Published date: 25 April 2023
• Subject Matter: Finance and Banking, Insurance, Financial Services, Insurance Laws and Products
• Law Firm: McMillan LLP
• Author: Ms Darcy Ammerman and Justin Novick-Faille (Summer Student)

In the 2023 Budget, the Federal Government announced their intention to partner with provinces and territories in order to launch a low cost flood insurance program in Canada. This announcement follows the release of Canada's Task Force on Flood Insurance and Relocation's report, Adapting to Rising Flood Risk, which provided insights and recommendations to the government for the development of a national flood insurance program (as discussed further here). Flooding has been Canada's most common and costliest disaster in the 21st Century, with total flooding losses in Canada estimated at $16.4 billion from 2013 and 2017. In recent years, more than fifty percent of losses from flooding have been uninsured, with the majority of the risk concentrated in a small number of properties. As part of the 2023 Budget, the government also announced two further flood related initiatives: the creation of an online portal where Canadians can access information on their flood risk and the modernization of the Disaster Financial Assistance Arrangements program to incentivize mitigation efforts.

The budget proposes to provide $31.7 million over the next three years to Public Safety Canada and the Canada Mortgage and Housing Corporation. Both would collaborate with the Department of Finance to create a low cost flood insurance program, aimed at Canadian households most vulnerable to flooding and those who do not have access to adequate insurance. As part of this program, a new Crown Corporation would be established to provide reinsurance and high-risk areas would have access to a separate insurance subsidy program.

In conjunction with this initiative, the Federal Government proposes to provide $15.3 million over three years to Public Safety Canada to create a publicly accessible online portal...