Baloney Meter: is climate change increasing the cost of insurance in Canada?

OTTAWA — “We can see that climate change is causing an increase to the cost of insurance in this country.” — Karen McCrimmon, parliamentary secretary to Public Safety Minister Ralph Goodale, May 1, 2019

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Flood damage, particularly in Atlantic and Central Canada, has been dominating news coverage in recent weeks as homeowners build sandbag fortresses, pump water out of basements and frantically move belongings and valuables to higher ground.

The devastation in places like New Brunswick, Ottawa and Gatineau, Que., the surburbs around Montreal and Ontario’s cottage country has also rekindled one of the most enduring and divisive questions of the 21st century: whether climate change is to blame.

Karen McCrimmon, Public Safety Minister Ralph Goodale’s parliamentary secretary and the MP for an Ottawa riding that’s seen flooding twice in three years, made her perspective clear earlier this week when asked about the issue on Parliament Hill: climate change, she said, is causing “an increase to the cost of insurance” in Canada.

Is she right?

Spoiler alert: The Canadian Press Baloney Meter is a dispassionate examination of political statements culminating in a ranking of accuracy on a scale of “no baloney” to “full of baloney” (complete methodology below).

This one earns a rating of “a little baloney”— the statement is mostly accurate but more information is required.

Here’s why.

THE FACTS

The question of climate change and its impact remains a contentious one. However, its existence is no longer in doubt: the impacts of climate change are “already being felt” across Canada, increasing the frequency and intensity of hazards such as floods, wildfires and drought, according to a recent report from Public Safety itself.

Those hazards pose significant risks to communities, individual health and well-being, the economy, and the natural environment, the report concluded.

In 2017, a report from the Munk School of Global Affairs documented that Canadian municipalities are especially vulnerable to climate change risks, particularly in the form of extreme weather.

“Flooding is currently the most costly hazard in terms of urban property damage, and water-related losses have surpassed fire and theft as the principal source of property insurance claims,” it said.

Insurance companies are also taking note of the impacts.

Last month, for example, TD Insurance created an advisory board on climate change and extreme weather. The insurer’s vice president, Kenn Lalonde, said it knows all too well the toll that weather and climate-related events are having on the lives of Canadians, and that action was necessary to better insure the public and the industry.

Still, though, the politically volatile atmosphere that continues to shroud climate change all but ensures that a true consensus among Canadians about how to deal with it remains a long way off. And given the political capital Justin Trudeau’s government has invested in establishing a price on carbon emissions, it’s hardly surprising that a federal report would warn of its perils.

Now that Jason Kenney’s United Conservatives are in power in Alberta and spoiling for a battle with Ottawa over issues like stalled pipeline projects and environmental assessments, the coming federal election is widely expected to be fought over some fundamental questions about resource development, the environment and whether there’s any way for the two peacefully co-exist.

Meanwhile, even some conservatives are acknowledging the impact of climate change.

“They say it’s 100-year storms — well it’s a few years later, and we’re back in the same boat,” Ontario Premier Doug Ford said Monday when touring the flood zone in Ottawa. “Something is going on and we have to be conscious of it.”

THE EXPERTS

Blair Feltmate is the head of the Intact Centre on Climate Change Adaptation at the University of Waterloo, established in 2015 through a $4.25 million contribution by Intact Insurance. Feltmate said he believes McCrimmon is correct to blame climate change for an increase in insurance rates.

But it’s far from the only factor, he added.

“It is climate change — combined with loss of natural infrastructure, combined with aging municipal infrastructure, combined with aging housing, combined with finished basements,” Feltmate said.

“All of them together contribute to an increase in insurance premiums, which over the course of the last year are up about 20 to 25 per cent, and 15 per cent of that … is explained by water and flooding.”

Over the decades, a considerable amount of southern Canada’s natural infrastructure has been paved over or turned into agricultural development, he added — a factor that can exacerbate the issue of water having nowhere else to go.

“When water hits these paved-over areas — in other words, urban, suburban areas, or areas of agricultural development — it doesn’t absorb as readily into the ground,” Feltmate said. “It runs off quickly to discrete locations in rapid order and that also contributes to flooding. It goes to the lowest point it can find.”

Canada is becoming a riskier place to insure, added Craig Stewart of the Insurance Board of Canada, the industry’s national association.

“Insurance prices are affected by the cost of reinsurance and reinsurers have publicly stated that they do not think Canada is ready for climate change or has taken the cost of it seriously enough,” he said.

Aging infrastructure is certainly a factor, but so too is under-built or inadequate infrastructure systems designed to deal with runoff, Stewart said. From the industry’s perspective, both issues are the result of a “lack of preparedness” in Canada.

“It is part of the reason why Canada is a risky place to insure and why insurers have been tentative about entering the overland (flooding) insurance market,” he said. “Particularly in urban areas, it is difficult to predict, based on the state of the … stormwater infrastructure, what is going to flood and what isn’t.”

IBC reported that in 2018, insured losses from severe weather events across Canada totalled $1.9 billion, the fourth-highest amount of losses on record.

THE VERDICT

While it’s not possible to empirically link a single powerful storm to climate change, experts agree that the phenomenon is to blame for a documented increase in the frequency and magnitude of extreme weather events.

“If you plot out the increasing frequency of the big storms that are occurring over the last half-a-dozen years in particular, we are getting more of them of greater magnitude,” Feltmate said.

“That, collectively, is attributable — at least in part — to climate change, so the parliamentary secretary is correct. But it is not the sole factor.”

Combine that with the fact that, despite a mounting body of evidence, the climate-change debate in Canada is not yet over, McCrimmon’s statement earns a rating of “a little baloney” — the statement is mostly accurate, but more information is required.

METHODOLOGY

The Baloney Meter is a project of The Canadian Press that examines the level of accuracy in statements made by politicians. Each claim is researched and assigned a rating based on the following scale:

No baloney — the statement is completely accurate

A little baloney — the statement is mostly accurate but more information is required

Some baloney — the statement is partly accurate but important details are missing

A lot of baloney — the statement is mostly inaccurate but contains elements of truth

Full of baloney — the statement is completely inaccurate

Kristy Kirkup, The Canadian Press