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Compensation flood : the French have a system that works



May 17, 2019 09:30

Flood waters in Ste-Marie-de-Beauce, Saturday, April 20, 2019 | Photo : Denis Méthot

While some of the rivers that have overflowed this spring are starting to return to their bed, the claims fall in insurers and insurance restoration specialists are already hard at work to restore the homes flooded.

The firm Aon, which compiles statistics on disasters on a weekly and monthly basis, estimated that the damage caused by flooding in Ontario, Quebec and New Brunswick will exceed hundreds of millions of dollars. Of these costs, only a part is covered, since the penetration rate of insurance coverage against flood waters is not very high.

Canada is lagging behind compared to G7

Don Forgeron, president and ceo of the insurance Bureau of Canada (IBC), pounds for the past several years that Canada is “lagging behind compared to other G7 countries,” with respect to the implementation of the national program to fight against floods.

If today several initiatives from governments, such as a national symposium on floods in Canada, no concrete solution has been put on the table to compensate the victims.

However, a model abroad proved to be a success since its introduction. Quebec should it be inspired ?

Cooperation public private to ensure the success

In effect, France has, there are already nearly 40 years old, a public-private so that the losses caused by natural disasters are almost all covered.

All the insured contribute in equal proportion to a fund administered by the Caisse centrale de réassurance, a public agency that wants to be a reinsurer of private insurers.

In an interview with the Journal de l’assurance, Bertrand Labilloy, president of the Caisse centrale de réassurance, emphasizes that the organization, with its accumulated reserves, could compensate up to 4.5 billion euros of claims without having recourse to public funds.

This example of cooperation between the public and private sectors is illustrated in another important aspect of risk management : risk cartography. The insurers and the Caisse centrale de réassurance have managed to build up a data base which represents up to 90 % of the market share for the risks insured and up to nearly 65 % loss.

In Quebec, such a cooperation does not exist. It is the responsibility of the municipalities to do the mapping of their floodplain areas. As a result, few have the means to do so, the mapping is inconsistent from one municipality to another or is not up to date. Some believe that Quebec has a delay of 25 years on the mapping of the province.

The premier of Quebec, François Legault, has recently stated that it intends to update the mapping in order to better guide public policies.

In-depth : find an analysis of the French experience and an interview of Bertrand Labilloy, in a record eight pages in the may edition of the Journal of insurance available to you shortly.

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