Environment Committee on June 3rd, 2019

[Ed Fast, Conservative, Abbotsford, BC]

Thank you, and thank you to all of our witnesses for being here.

My questions are going to be directed to you, Mr. Stewart. I'm very interested in what you had to say about disaster risk reduction, and specifically the high-risk insurance component that you're asking the federal government to support.

Can you tell us what that program would look like? You've mentioned the United States. Does it actually have a high-risk disaster reduction program?

[Craig Stewart]

In the United States, FEMA runs what's called the national flood insurance program, which is a very sophisticated program that's responsible not just for insurance but also for funding flood mapping—they invest hundreds of millions a year in flood mapping across the country—as well as a community incentive system. They award points to communities based upon how those communities de-risk themselves. They essentially are providing a financial incentive to communities that lower their own risk, and therefore can make insurance available to them or more affordable to their residents. It focuses very much on high-risk parts of the country, such as south Florida.

The problem with the program, in our analysis of it, has been that it was susceptible to some major events. Right now, that program is over $20 billion in debt as a result of four major hurricanes that hit the southern U.S. all in one year.

From taking a look at it.... Also, it's run by governments, and government isn't always the most effective way to run such programs, which is why we favour Great Britain's approach in the U.K., which was just launched on April 1, 2016. That is a public-private partnership between insurers and governments in Great Britain. Insurers actually run it. It's transparent to the homeowner. They're just operating through their regular insurers, but behind the scenes, insurers basically collect premiums and remit them to a high insurance pool, which is ring-fenced. It's a non-profit entity. Everybody is offered affordable insurance.

[Ed Fast, Conservative, Abbotsford, BC]

Is there a cost to government under the British model?

[Craig Stewart]

The government backstops it to a degree, but that particular model is funded through levies applied to insurance policyholders across the country. There's a bit of cross-subsidization from insurance policyholders, but not really from the taxpayers in Great Britain.

[Ed Fast, Conservative, Abbotsford, BC]

All right. That sounds like a model we should be pursuing.

[Craig Stewart]

It's the model that ministers have asked us to take the closest look at.

[Ed Fast, Conservative, Abbotsford, BC]

All right.

You also suggested that homes that are at highest risk of being flooded, those in very clear flood plains, should be removed and the inhabitants moved to other areas.

I'm assuming it's the government that would be expected to cover the cost of that.

[Craig Stewart]

Yes. In that case, you do have properties that, as we've seen unfortunately in this region, are going to repeatedly flood. They would drain any insurance pool that you set up, and other policy holders would essentially be subsidizing them for living there, which isn't right.

Those people, who probably shouldn't have been there in the first place, are a liability that the insurance industry really does not want to take on. They should be moved, through one-time programming—

[Ed Fast, Conservative, Abbotsford, BC]

Federal programming?

[Craig Stewart]

Federal, provincial or municipal. That's a discussion that has to happen.

This is called strategic retreat. You carefully select those communities that should either be moved or elevated. You can elevate these homes as well, either by putting them on stilts or on berms, but they must be moved out of harm's way. You can design this program even as they've done in the Netherlands where they've created sacrificial areas. They've essentially said, “Okay, this whole area, we're just going to move. We're then going to divert water into it, and that's going to reduce flooding downstream and protect communities downstream,” so you can do this intelligently.

[Ed Fast, Conservative, Abbotsford, BC]

In terms of the natural infrastructure that you referenced, I'm curious to know to what degree the federal government has actually supported natural infrastructure and disaster mitigation efforts such as wetland restoration and expansion through federal infrastructure monies.

[Craig Stewart]

To date, with the disaster mitigation and adaptation fund run by Infrastructure Canada, natural infrastructure is eligible in that program. Unfortunately, the threshold for the program is such that it's quite high. The minimum threshold is $20 million, so you can't apply only for a natural infrastructure project. It's just too high for it, as well as from a cost matching perspective. However, we understand that in the first tranche of applications made to that program, about 30% of them did have a natural infrastructure component, so the demand is essentially there.

We're recommending that there be tweaks made to that program so that very innovative programs such as the ALUS program, which is basically a landowner compensation program, can be made eligible. Much of this natural infrastructure is not on public lands; it's on private lands, so we need to figure out innovatively how we incent people to protect that.

We're recommending that tweaks be made to that. We're recommending that the program be expanded because it's a success, but also that tweaks be made to it, and those conversation have been had with officials at Infrastructure Canada.

[Ed Fast, Conservative, Abbotsford, BC]

Thank you.

[The Chair, Liberal, John Aldag]

Okay. Mr. Stetski, over to you for your six minutes.

[Wayne Stetski, NDP, Kootenay—Columbia, BC]

Thank you all for being here today. Again, I'm going to focus primarily on Mr. Stewart, I think.

I'm curious about the committee that was put together. You said there were four provinces represented on it. I'm just curious which ones they were and how they were selected to be on that committee.

[Craig Stewart]

They were self-selected. British Columbia, Manitoba, Ontario and Quebec are all represented. That said, the Province of Alberta has been very engaged, as have the provinces of New Brunswick and Nova Scotia. Those four provinces are officially on it, but it's not limited; it's open to participation by others.

[Wayne Stetski, NDP, Kootenay—Columbia, BC]

Okay.

I've worked at the municipal level as a mayor, and I've been with provincial government and now federally. From the Insurance Bureau's perspective, what makes you shake your head and say, “Why isn't the municipality doing this?” What should the municipalities, provinces and the federal government be doing—all three levels—mostly to prevent, but also to help mitigate against, flooding, as an example? We could talk about fires as well. What do you think we should be doing more of at all three levels of government?

[Craig Stewart]

We should be collaborating closely; that's the number one thing. That's the municipalities, as well as the provinces and federal departments, with the private sector insurance industry, realtors and banks. It gets to that whole-of-society piece that we talked about.

We need to be engaging together, because this is a complex problem. We should first be working together to prioritize infrastructure spending. There is a lot of money out there, but it should be prioritized to the highest risk and most problematic areas. We should be communicating and sharing flood-mapping data much more than we do.

As insurers, we need to do a better job of recognizing disaster mitigation efforts. When municipalities are investing in disaster mitigation, they should be seeing the return on investment from that in terms of the availability of insurance and the pricing of that insurance accordingly.

Those conversations have begun, but frankly, there is a ways to go. We need to do a much better job of it.

I guess it comes down to that we need to be collaborating.

[Wayne Stetski, NDP, Kootenay—Columbia, BC]

Is the Insurance Bureau funding any proactive initiatives related to climate change? For example, would the insurance industry produce best management practices on water management, or any of those kinds of initiatives? Are you putting your money into any proactive things related to climate change?

[Craig Stewart]

Absolutely.

We have, just in the last year, funded a workshop and reports on how to incorporate natural infrastructure more effectively into mitigation planning. We've done that in partnership with the Intact Centre at the University of Waterloo and the International Institute for Sustainable Development. We're also in partnership with the Federation of Canadian Municipalities on quantifying the effects of climate change on municipalities. That report is forthcoming.

We have also been doing a fair amount of work with municipal stormwater managers, represented through the Canadian Water Network, on how to better incorporate climate considerations into our risk modelling. Natural Resources Canada has been a partner in that as well.

That's just a sample of what we've been working on.

[Wayne Stetski, NDP, Kootenay—Columbia, BC]

I'm very happy to hear that. In the end, we all have the same objective—trying to keep homeowners safe, maybe for different reasons potentially, but that objective is certainly there.

Mr. Moreau, is your company a private company that specializes in emergency management? Is that the context for you?

[Richard Moreau]

It's one of the business lines within the company, but certainly emergency management and preparedness is one of our key areas.

[Wayne Stetski, NDP, Kootenay—Columbia, BC]

Going back to my time as a mayor, we all had emergency response plans in place.

How do you think municipalities are doing in adapting emergency response plans to the reality of climate change?

[Richard Moreau]

The challenge is resources.

Some of the communities that have more risk exposure are not necessarily the biggest or the ones with the deepest pockets, so their ability to maintain their plans and procedures, and to practice them, is very limited. They would benefit from being enabled by some funding mechanism at the provincial or federal level. It's extremely limited.

[Wayne Stetski, NDP, Kootenay—Columbia, BC]

As a mayor, I used to be quite insulted, because the emergency plan said that the role of the mayor was to not get in the way of the real work.

I have a quick question for FireRein.

Do you have a cost comparison...? I'm trying to figure out why, if the product is what you say it is, it isn't used more often. Is it a cost thing? Is it a lack of a long-term track record? What's the situation?

So on the cost comparison first of all—