An Experiment on Residential Flood Insurance

Availability

A study on residential flood insurance availability conducted for Public Safety Canada in 2017 found that almost half of the residences in flood plains or zones in Canada could, at a price, buy flood insurance.

That percentage should be expected to grow as insurers improve their flood plain mapping.

What about an urban flood, so called “pluvial” floods?

With few flood maps to guide them on pluvial floods, how are Canadian insurers at underwriting “urban floods”. The above referenced study found that a destructive pluvial flood occurred more than twice as often as a riverine-type fluvial flood, although was only a fifth as damaging. 

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Experiment

As a small and simple experiment, I decided to “test the market” on standalone pluvial flood insurance.

My underwriting profile is as follows:

1.       no fluvial flood exposure: zero. 1 km from and 15m above nearest river.

2.       the pluvial flood exposure is mitigated by:

·         major storm sewer upgrade six years ago

·         major storm pond installed in neighborhood four years ago.

Through my relatively knowledgeable insurance broker, I sought quotations from three insurers: Aviva, Chubb and Intact. There were numerous questions from each insurer to be answered before the quote was obtained..

The results are shown below (base premiums were all within 10% of one another).

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Results

In terms of underwriting ability of a very low pluvial flood risk, I believe the results speak for themselves.