Flood Flashcards
what are the priority areas for the Emergency Management Strategy(EMS) in Canada
think about what need to improve before/during/after disaster
- understanding disaster risks in all sectors
- focusing on disaster prevention and mitigation
- collaboration to strenthen resilience
- enhancing disaster response capacity and development of new capabilities
- strengthening recovery efforts
how can overall floow risk be reduced
- relocation
- building resilient infrastructure
key drivers of flood risk in Canada
- population growth
- urban development
- climate change
- densification and development of urban areas exposed to flood
challenges in making flood insurance available and affordable in high-risk areas
- high costs of insurance
- low risk awareness among homeowners
- misaligned incentives that do not encourage risk reduction or insurance purchase
why is flood cost-prohibitive for low-income households
- high housing costs
- recent flood events
- reinsurance rates
- material changes in risk leading to increased premiums
why do most Canadians in high-risk areas lack awareness of their flood risk
- flood maps are not easily accessible leading to homeowners not purchasing coverage
- not buying enough optional flood coverage
- not investing in property-level protections
what is the impact of misaligned incentives on flood risk management
homeowners and local governments have little incentive to reduce risk or purchase insurance and the expectation of government assistance reduces motivation for lower-level stakeholders to take preventive measures
what does the EMS emphasize regarding financial risk sharing for disasters
the need to develop options for sharing the financial risks of disasters
what is the traditional approach to flood risk management
building structural controls to keep people and property separate from flooding sources
what is flood risk management (FRM)
an approach where the responsibility for flood risks is spread across various stakeholders and uses non-structural mitigation methods to complement structural ones
what are the responsibilities of the Federal Government in flood risk management
- coordinating and supporting local efforts
- providing assistance through the DFAA program
- offering emergency management services to Indigenous groups
- regulating and monitoring water resources
basically high-level oversee
what are the responsibilities of the Provincial Government in flood risk management
- setting regulations and policies on land use
- regulating the insurance sector
- establishing land use planning standards
- regulation natural resource development
more related to regulation stuff
what are the responsibilities of the Indigenous Communities in flood risk management
- developing community emergency management plans
- working on structural mitigation projects with ISC
- receiving funding from CIRNAC to respond to climate change impacts
what can a community do
what are the responsibilities of the Insurance Industry in flood risk management
- transferring flood risk from homeowners to insurers
- participating in data collection
- incentivizing risk reduction measures
- helping shift burden away from government DFA programs
4 preconditions needed to enable the private market to function in flood insurance
(LIAA):
- limited or restructured post-disaster financial assistance
- improved public awareness of flood risk
- accurate and up-to-date flood maps
- adequate investments in flood defenses
what are the responsibilities of Non-governmental and Civil Society Organizations in flood risk management
- supporting flood recovery efforts
- emergency planning
- public education
- coordination volunteers
- providing on-ground assistance during incidents
what are the responsibilities of communities and individuals in flood risk management
seeking information on flood risks and undertaking non-structural risk mitigation efforts, such as:
- purchasing flood insurance
- flood-proofing homes
what is the most effective strategy for reducing flood risk
strategic relocation, which involves removing all assets and properties at high risk of repetitive flood damage through government buyouts
what are the challenges associated with strategic relocation
challenging, time-consuming, expnesive, and there is an affordable shortage in Canada
what type of flood insurance market does Australia have
- fully private market with regulation from the government
- voluntary take-up
- risk-adjusted premiums
- low cost to the government
what are the main characteristics of France’s CatNat scheme for flood insurance
- 12% surcharge on home insurance policies
- mandatory for mortgages and optional otherwise
- premiums ceded to a state-owned reinsurer
- affordable
- lacks risk differentiation incentives
how does the UK manage flood insurance for high-risk areas
- private insurers provide coverage
- premiums ceded to a high-risk reinsurance pool (Flood Re)
- affordability prioritized
- non-profit entity accountable to the government
- minimal cost to the government
what’s the US’s national flood insurance program (NFIP)
- administered by FEMA
- mandatory for federally backed mortgages in flood-prone areas
- risk-based premiums
- community rating system for risk reduction
- available and affordable
- high cost to the federal government
4 guiding thems for Canada when setting up a flood program
- uncertainty
- market penetration, adverse selection and mutuality
- affordability
- moral hazard
policy objectives for flood insurance in Canada
- adequate and predictable financial compensation
- risk-informed price signals and mitigation
- affordability
- wide availability
- maximized participation
- value for money for governments and taxpayers
what are the trade-offs between availability and affordability in flood insurance
increasing affordability may reduce financial incentives for property-level risk reduction and likely increases government costs
what are the trade-offs when prioritizing risk-based pricing
it will affect the number of residents who can participate
what are the trade-offs balancing affordability and coverage
balancing affordability requires trade-offs between adquate coverage and financial burden to the public
what are the trade-offs in focusing on cost-effectiveness for flood insurance
it may shift the burden to homeowners or municipalities, with the total flood risk cost remaining (and only reducible through mitigation and prevention)
what are the trade-offs in maximizing participation in flood insurance
maximizing participation with mandatory provisions and government funding increases government costs
what are the 4 proposed insurance models for Canada
- flat cap risk-high pool
- tiered risk-high pool
- public insurance
- public reinsurance (layered)
how does climate change impact flood risk modelling
risk distribution is expected to change due to increasing and severe climate events
how is affordability measured in the insurance models
by the ratio of premiums to household wealth or income
what is the role of deductibles in the insurance models
initial costs paid by homeowners to reduce moral hazard and incentivize risk reduction
what is residual risk in the context of flood insurance
financial risk remaining after applying insurance, important for transitioning from public disaster financial assistance (DFA) to an insurance-based system
what is the primary focus of the risk reduction efforts in the insurance models
targeting the riskiest properties through strategic relocation or other mitigation measures to reduce the annual costs of caps and subsidies
how is inflation expected to impact flood risk models
inflation on re/construction costs is typically higher than inflation on common goods and services, impacting future projections
what is the importance of standardizing flood insurance policies
standardization increases government involvement, ensures consistent coverage, and reduces coverage disputes
what are the key objectives of the actuarial models for flood insurance in Canada
- adequate and predictable financial compensation
- risk-informed price signals and mitigation
- affordability
- wide availability
- maximized participation
- value for money for governments and taxpayers
how is the government backstop used in flood insurance models
it provides stablization through capital investment and accumulation of reserves reducing the probability of drawing down the backstop over time
how can the insurance arrangement be de-risked
restricting eligibility for the highest risk homeowners
why is it important to ensure adequacy of flood insurance coverage
to ensure that homeowners that have sufficient coverage for expected losses and do not rely on government assistance for larger events
how can standardized policy language improve flood insurance
it simplifies policies and emplowers consumers, reducing ambiguity regarding coverage amounts and responsibilities based on the source and cause of flooding
what are the key evaluation points for the Flat Cap High-Risk Pool model regarding adequacy and predictability of compensation
- allows consumer choice
- standardized coverage
- optional coverage can lead to inadequacy for some
how does the Layered Public Reinsurer model perform in terms of adequacy and predictability of compensation
strong, with mandatory take-up in Layer 2 ensuring big events are sufficiently covered (and optional coverage in Layer 1 allowing homeowners to self-insure)
what are the key points learned about risk reduction
insurance alone won’t reduce risk significantly, necessary to mobilize governments and communities for risk-informed decision-making and investments in flood mitigation
how can individual risk reduction behavior be incentivized
- premium price
- deductible
- capacity to pay
- linking premiums to mitigation actions
which model is the strongest in terms of risk reduction and why
layered public reinsurer, as it:
- balances homeowner and government mitigation incentives
- encourages property-level protection and strategic community/watershed-level risk reduction
what makes defining an affordability threshold complex
factos like:
- ability to pay
- relative risk
- income
- housing costs
- type of coverage
- regional differences
how does the public insurer model address affordability
combines a single higher premium cap and means-tested subsidies, balancing affordability while reducing excessive costs for the highest risk properties
why is ensuring insurance availability important
it ensures coverage remains available post-flood and addresses gasps in northern, remote, and some indigenous communities
which model is weakest in terms of participation and why
Flat Cap High-Risk Pool, as it relies on optional coverage which leaves substantial residual risk for homeowners
how does the public insurer model perform in terms of participation
strong, with mandatory bundling with home insurance achieving near-complete participation across all risk levels
what are the key factors in assessing value for money in flood insurance models
- cost benefits
- financial sustainability
- government backstop involvement
- predictable fiscal expenditures
how does Flat Cap High-Risk Pool model perform in terms of value for money
- weak
- requires significant government funding
- high residual risk
- potential for ad-hoc relief pressure on governments
what are the main points of the Public Insurer model in terms of value for money
- strong
- lowest overall residual risk
- comprehensible annual fiscal liabilities
- predictable annual fiscal liabilities
- incentivizes mitigation efforts
why is standardization needed in the flood insurance market
clear, standardized language in flood insurance reduces confusion and comprehensive flood coverage with seamless bundling improves outcomes
why is participation key in flood insurance
maximization participation through affordability measures, incentives, or mandates is critical to ensure adequate coverage and reduce residual risk
what is the impact of greater public intervention in flood insurance
it can more fully close protection gaps, but at a cost, aiming for higher participation rates and increased affordability without significant risk reduction investments
how can relocation serve as a risk reduction tool
it removes risk and improves insurance viability, though practicality in areas with housing shortages must be considered
why is community-level engagement important in relocation efforts
ealy engagement with communities and jurisdictions is crucial, particularly for indigenous communities with strong ties to their land
why is the affordability of flood insurance premiums important
it enables equitable access to insurance, supporting socio-economically disadvantaged groups
what other factors, besides money, influence access to flood insurance
- removing barriers
- promoting financial literacy
- building community capacity
- adapting national solutions to regional or cultural contexts
how should indigenous perspectives be incorporated into flood risk management
indigenous knowledge and perspectives should inform flood risk management
