Thank you, Chair and committee members, for inviting me today.
I'm Susan Penwarden, managing director of personal insurance for Aviva Canada, a national property and casualty insurer serving two and a half million customers across auto, personal property and commercial insurance. I'm also the outgoing chair of the Insurance Bureau of Canada's natural catastrophe committee and co-chair of the resilient homes task force at the ICLR. All that is to say that I see first-hand both the human and economic impact of extreme weather events on Canadians from coast to coast.
As I'm sure your study will demonstrate, we must act now to protect Canadians and their assets from this ever-increasing risk. For our part, Canadian insurers continue to manage escalating claim volumes while funding community-level projects that support resilience. We share your commitment to protecting Canadians, but the scale of this challenge means we cannot do it alone. We must adopt a whole-of-society approach to solving this challenge.
What can the federal government do to support a resilient future for our nation?
Number one is a shift in mindsets. We must move away from reactive disaster recovery and toward proactive investment in risk reduction and resilience. Why? Simply put, it makes economic sense. Last year, insured losses from severe weather ballooned to $9.2 billion, a shocking sum, yet only a portion of the total economic impact. As our ICLR colleagues will highlight, we estimate that insured losses account for less than half of the total economic cost of disasters.
In contrast, investing in adaptation and resilience creates wide-reaching benefits for Canadians and the broader economy, from the mitigation of direct losses to the ability of local economies to recover quickly. Through investments in research centres like ICLR, our industry knows how homes can be built to withstand these threats. We've invested in putting that knowledge to the test, right now with two pilots in southern Alberta, in partnership with both the ICLR and Habitat for Humanity.
With this knowledge, Canada could become a leader in adaptation, but we need the federal government's help to scale what works. This means updating the National Building Code and ensuring adaptation is at the core of the new Build Canada Homes agency framework. It also means supporting the manufacture of resilient building materials to improve their supply, making necessary upgrades cheaper for Canadians while also generating economy-wide benefits. At a municipal level, it's equally urgent for all levels of government to work together to ensure that critical infrastructure is upgraded to meet the demands of future weather conditions.
This leads me to point number two: We need to close the adaptation funding gap through better capital allocation. The $2-billion disaster mitigation adaptation fund was massively oversubscribed. For perspective, it's estimated that Toronto alone needs $26 billion in infrastructure improvements to withstand severe weather. We need to give adaptation the urgency it deserves.
Point number three, we need to ensure that all Canadians have adequate protection against flooding, which is Canada's greatest climate-related risk. Today, more than 1.5 million homes—or 10% of the current housing stock—are built in areas of high-risk flooding. In effect, these properties are becoming uninsurable. This is why you must continue to work on a national flood insurance program that is complementary to the private insurance industry and will provide protection for those high-risk homes.
However, this has to be a sustainable solution. Over the long term, the program must also incorporate elements of adaptation to reduce risks over time, while also discouraging local governments from steering future development towards these high-risk areas.
Finally, we have point four. Our industry, alongside coalitions like Climate Proof Canada, is urging the federal government to create a national emergency management agency to improve coordination for disaster preparedness, response and recovery.
We were glad to see the federal government's recent launch of a new weather alert system. This is an important step towards helping Canadians to protect themselves. However, Canada remains the only G7 country without a dedicated national emergency management agency, which would greatly enhance national coordination, strengthen resilience and reduce the financial toll of natural catastrophes.
To close my remarks, I must emphasize again that severe weather directly impacts people, their communities and our economy. The scale of the threat in the future depends on what we do today. If we act now by making meaningful investment in resilience a national priority, scaling the adoption of evidence-based solutions and better coordinating national disaster recovery and preparedness response, then we not only protect Canadians today but also shift the economic trajectory of our nation and transform risk into an opportunity.
With your support, we are ready to work with you to make adaptation part of Canada’s economic strength.
Thank you.