The True Cost of Flooding in Canada: Catastrophe Losses Insights

Flooding poses a significant threat to Canadian communities, causing extensive property damage and disrupting lives. We’ll examine recent catastrophic flooding events in Canada and historical trends in flood losses. 

You’ll gain insights into the current policy framework for flood management and explore future outlooks for preparing against heightened flood risks here in Saskatchewan. 

Historical Trends in Canadian Flood Losses

Canada has a long history of grappling with devastating floods. Records dating back to the 19th century reveal major flood events, such as the catastrophic flooding of the Lower Fraser River valley in British Columbia in May 1894.

Over the years, the frequency and severity of these floods have increased significantly. This trend is particularly evident in recent decades. The average cost of weather-related disasters in Canada has skyrocketed by a staggering 1250% since the 1970s. 

In the past decade alone, Canada has experienced more than 35 catastrophic flooding events. On average, these floods have resulted in insured losses exceeding CAD 41.64 million per event. This alarming trend underscores the growing financial burden of flooding on Canadian communities and the insurance industry.

Factors contributing to the increasing severity and frequency of floods include climate change, urbanization, and deforestation. Rising temperatures lead to more intense rainfall and melting glaciers, while urbanization and deforestation can exacerbate flood risks.

Recent Catastrophic Flooding Events in Canada

Canada has experienced a summer of unprecedented flooding, making it the fourth-worst year for insured losses. This year’s catastrophe season has been particularly active, and experts warn that more severe weather events may occur.

In July, Toronto was hit by a significant rainstorm that caused flash flooding, resulting in insured damages of nearly $1 billion. A subsequent record-breaking rainfall over the weekend added to the devastation, bringing more than a month’s worth of rain in just a few hours.

Quebec was also severely impacted by flooding in August. Tropical Storm Debby caused widespread damage, leading to approximately 70,000 insurance claims. This is a staggering number, far exceeding the usual volume of claims. The rainfall affected 35 municipalities across the province, with three declaring a local state of emergency.

Canadians are bracing for more potential flooding events and the associated economic toll as the summer continues into the fall season.

Charles Brindamour, CEO of Intact Financial Corporation, says,

The summer catastrophe season has been active, and additional events may occur,” the company said in its release. “Given that the Q3 2024 catastrophe losses will be materially above our original expectation, we expect to provide an update for the full quarter during the first half of October.

Financial Toll of Floods

In an average year, flooding is expected to cause about CAD 2.78 billion in structural damages to residential properties in Canada. This figure has been steadily increasing, with the average cost of weather-related disasters rising to 5-6% of annual GDP growth over the last decade. 

The financial toll is staggering, with insured damage from severe weather reaching over CAD 4.30 billion in 2023 alone. Today’s typical storm or flood costs over CAD 152.68 million, compared to roughly CAD 11.10 million in the early 1970s.

According to Aviva Canada CEO Tracy Garrad, initial calculations indicate that the Canadian property and casualty insurance sector will incur expenses of approximately $1 billion for the Ontario flooding. The cost of the Montreal flooding resulting from Hurricane Debby is still uncertain at this early stage, but insurance companies have already received claims that are 10 to 17 times higher than the average amount, as reported by the Insurance Bureau of Canada.

The image is from https://climateinstitute.ca/reports/tip-of-the-iceberg/ Tip of the Iceberg
Navigating the Known and Unknown Costs of Climate Change for Canada

Policy and Regulatory Framework for Flood Management

In Canada, flood risk management (FRM) is a shared responsibility among federal, provincial, and municipal governments. While the federal government plays a coordinating role, the fragmented nature of FRM can be challenging due to varying capacities and resources across different levels of government.

To address rising flood risks, the National Disaster Mitigation Program (NDMP) was established in 2014 with CAD 277.60 million in funding over five years. This program aims to build safer communities by focusing on significant, recurring flood risks and facilitating private residential insurance for overland flooding.

The current policy framework has evolved to reduce reliance on structural defences and disaster assistance. However, it has been criticized for not fully embracing a risk-based, anticipatory approach. Most funding continues to be allocated for structural defences and rebuilding rather than pre-disaster mitigation.

A key challenge in FRM is the lack of collaboration between insurers and municipalities. Insurers use data to assess property flood risk and determine insurance premiums, while municipalities use data to identify flood-prone areas and implement mitigation measures. By sharing data, insurers and municipalities could work together to prioritize infrastructure improvements in high-risk areas, reducing homeowners’ flood risks and lowering insurance premiums.

As seen in Quebec and Ontario this summer, the increasing frequency and intensity of rainfalls and aging water infrastructure have made Canadian cities more vulnerable to flooding.

Collaborating on data sharing between insurers and municipalities can help identify and address the most urgent infrastructure needs. This approach can contribute to building long-term resilience to flooding and reducing the financial burden on both governments and homeowners.

Future Outlook: 

Flooding and drought in Saskatchewan

The Canadian prairies experience extreme weather conditions, frequent droughts, floods, and storms. These events are often perceived as unprecedented, but historical records show similar occurrences in the past. 

Weather and water gauges have been installed since the 1880s, but long-term records are limited. To understand the historical context of these events, scientists at the Prairie Adaptation Research Collaborative (PARC) Tree-Ring Lab at the University of Regina use tree rings.

By analyzing tree rings, researchers can reconstruct the climate and hydrology of the past millennium. Tree growth is limited by heat or water availability, and variations in annual growth reflect fluctuations in rainfall, water levels, and river flow. 

The below chart shows the results of the research using the annual volume of water in the Assiniboine River at Kamsack and ring-width data from bur oak trees growing in the valleys of the Qu’Appelle and Souris Rivers and Pipestone Creek, which flow into the Assiniboine River.

Image is from https://www.floodsafesask.ca/trees LEARNING FROM TREES / What wood samples tell us about flooding and drought in Saskatchewan
By David Sauchyn, Director, Prairie Adaptation Research Collaborative

This data allows scientists to compare current weather events to past patterns, providing valuable insights into the future of flooding in Saskatchewan. 

The study indicates that human-induced climate change will enhance climate variability and the intensity of weather events. Warmer oceans will increase evaporation, transferring more water into the air, which can hold more moisture. 

Additionally, higher rates of evaporation from land will result in precipitation deficits. As a result, we can expect a higher frequency of truly exceptional weather events as the global climate continues to warm.

Investing in resilient infrastructure is crucial going forward. The federal and provincial governments are allocating funds to protect communities. For instance, check out our province’s resource of FloodSafe Sask. These initiatives empower you to actively build flood resilience in your area.

FAQs

What are the projected costs of flood damage in Canada for the future?

With the potential damage caused by flooding to homes and buildings, the annual cost could rise to as much as $300 million by mid-century and increase tenfold by the end of the century, reaching an alarming total of $13.6 billion annually.

What was the most costly flood disaster in Canadian history? 

The 2013 Southern Alberta Flood stands as the most expensive flood catastrophe in Canadian history, with about $6 billion in financial losses. 

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