Govt.FloodSolutions Flashcards
Why was the Task Force on Flood Insurance and Relocation established?
to explore solutions for high-risk areas and potential relocation strategies
Identify and briefly describe the 3 types of flooding
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fluvial(river flooding) :- when the water level in a river, lake or stream rises and overflows onto the neighboring land
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pluvial- when an extreme rainfall event creates a flood independent of an overflowing water body
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coastal- when dry and low-lying land is submerged by seawater
Identify 5 priority areas for action under EMS (Emergency Management Strategy)
- Enhance whole-of-society collaboration
- Improve understanding of disaster risks
- Increase focus on whole-of-society prevention and mitigation
- Enhance disaster response capacity
- Strengthen recovery efforts by building back better to minimize the impacts of future disasters
Identify and briefly describe the key drivers of Canada’s flood risk
* Population growth and urban development:
- urban densification in flood-prone areas contributes to flood risk (70% of Canada’s population)
* Climate change: - Climate Change: warming in Canada’s North ( 3X global rate); increase frequency/intensity of pluvial and fluvial and coastal flooding
Identify 3 problems pertaining to flood insurance in Canada
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high cost(especially for low-income households)
–>recent flood events cause increased premiums -
low risk awareness
–>information about floods, including flood maps, may be unavailable -
misaligned incentives
–>taxpayer-funded DFA programs contribute to a moral hazard
(because people may rely on that instead of buying insurance)
Fully describe the implications of low risk awareness of flood risks in Canada
- no coverage: people may not purchase flood insurance if they are not aware of the risk
- no coverage: people may think their standard homeowner’s policy covers floods when it doesn’t
- insufficient coverage: people who do buy optional flood coverage may have insufficient protection
- insufficient mitigation: people may be less likely to invest in property-level flood protection
Fully describe the moral hazards associated with misaligned incentives regarding flood risks in Canada
In general:
* a moral hazard is the expectation that governments will provide post-disaster financial assistance regardless of poor decisions by individuals and communities on where to build
Briefly describe the concept of FRM (Flood Risk Management) (4)
- an alternative approach to conventional flood control measures
- promotes the use of non-structural mitigation measures to complement and enhance other types of mitigation
- stakeholders include: government, industry, communities, non-government organizations, individuals
- an iterative process of: acting, monitoring, reviewing, adapting
Regarding FRM (Flood Risk Mgmt), identify roles & responsibilities of the federal govt (2)
- Coordinating and supporting local efforts
- Providing assistance through the DFAA program
- Offering emergency management services to Indigenous groups
- Regulating and monitoring water resources.
Regarding FRM (Flood Risk Mgmt), identify roles & responsibilities of the Provincial govt (2)
- regulate insurers
- implement land use & flood risk management policies
- Regulating natural resource development
Regarding FRM (Flood Risk Mgmt), identify roles & responsibilities of the municipal govt (2)
- develop community emergency management plans
- addres unique challenges (geography, social/cultural)
(particularly in northern and remote communities)
Regarding FRM (Flood Risk Mgmt), identify roles & responsibilities of the insurance industry (2)
- provide flood insurance
- offer overland flood endorsements (fluvial, pluvial flooding)
Regarding FRM (Flood Risk Mgmt), identify roles & responsibilities of the non-governmental groups (2)
- act as initial responders during flood incidents
- coordinate volunteers in recovery efforts
Regarding FRM (Flood Risk Mgmt), identify roles & responsibilities of the communities & individuals (2)
- seek information to understand their property’s flood risk
- purchase flood insurance
Identify the necessary preconditions for success of a private flood insurance market (3)
- Public
awarenessof flood risk - Accurate & up-to-date
flood mapping - Investments in public and private flood defenses
- Limit post-disaster financial assistance from the government to encourage
flood mitigation investments
Identify prevention and mitigation measures an individual household can implement (4)
- installing a backwater valve
- having a basement sump pump
- maintaining appropriate lot grading
- clearing eaves troughs and extending downspouts
Identify prevention and mitigation measures that can be implemented on a national level (4)
- stricter building codes
- improved flood risk information
- investments in climate resilience (Ex: infrastructure resilience, environmental resilience)
- funding for watershed level mitigation projects
Identify the design characteristics of flood insurance programs (4)
*or varibales used to evaluate a flood program
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Administration: Role of Government versus Role of Private Insurers -
Choice: Voluntary or Compulsory -
Packaging: Standalone Product or Bundled with Other Perils -
Premiums: Risk-based or Uniform Pricing or gov’s rates
Describe the flood insurance program in: Australia
Administration: private sector and government regulates
* promotes private partnerships for risk management
Choice: Voluntary (both offering and uptake)
* varied availability based on flood risk levels
Packaging: often Bundled with other perils
* coverage and specific flood-related perils vary by insurer
Premiums: Risk-based
* not regulated or subsidized by the government
* potentially high for highest risk properties
* retrofits recognized in premium calculations
Describe the flood insurance program in: France
Administration: government oversees CatNat scheme
* CatNat is supported by state-owned CCR (that reinsures insurers)
* local governments are encouraged to adopt risk reduction plans
Choice: depends
* home insurance (including CatNat) complusory for property owners with a mortgage
* voluntary otherwise
Packaging: Bundled
* CatNat, covering flood and other natural disasters, is added to all property insurance contracts
Premiums: Uniform Pricing
* 12% surcharge on home insurance policies for natural disasters
* no incentive for property-level mitigation
Describe the flood insurance program in: United Kingdom
Administration: Flood Re manages the flood insurance system.
* the Flood Re pool is a private sector entity accountable to the government,
Choice: depends
* not compulsory by law but often required by mortgage lenders for high-risk properties
* voluntary for properties without a mortgage or for low-risk properties
Packaging: Bundled with homeowner’s policies
* ceded to Flood Re when premiums exceed an affordability cap
Premiums: reflect home values rather than risk level
* affordability is prioritized
* supplemented by a levy on all residential policies
* a criticism is that high-value properties (wealthy homeowners) are effectively subsidized
Describe the flood insurance program in: United States
Administration: NFIP (National Flood Insurance Program) administered through FEMA (Federal Emergency Management Agency)
* some involvement from private insurers
Choice: Depends
* Compulsory for homeowners with federally-backed mortgages in flood-prone areas
* Voluntary elsewhere
Packaging: Standalone
* discounts for communities implementing risk-reduction measures
Premiums: Risk-based
* some older government-subsidized policies will transition to risk-based
identify considerations for guiding the development of flood policy options in Canada (4)
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Minimize uncertainty:
* invest in risk reduction in high-risk areas to expand insurability -
MAXIMIZE market penetration&minimize adverse selection- incentivize (or require) the purchase of flood insurance through bundling of flood coverage with other perils
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Design foraffordability
* prioritize means-testing to guide any public subsidy to households for flood insurance affordability
* but eventual goal is risk-based rates for everyone -
Minimize moral hazard:
* implement minimum deductibles and avoid incentivizing new development in high-risk areas
Briefly describe the policy goals/objectives of Canada’s Task Force on flood insurance (6)
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Adequate
* settle claims quickly & accurately -
Affordable
* inclusive & equitable for customers -
Available
* for all types of floods (fluvial, pluvial, coastal) and in all geographic areas -
Participation
* ensure premiums are affordable and provide incentives purchasing -
Risk-based pricing
* incentives risk reduction & minimizes moral hazards -
Value for money
* reduce burden on public DFA
* shift expenditures FROM recovery TO mitigation & adaption
Would a flood premium of $250 for $500,000 of coverage be considered high-risk?
No, because $250 is less than 0.1% of 500,000 (which is $500)
AAL or premiums ≥ 0.1% of coverage to be consider High-risk
What is cross-sbusidization?
- a transfer of some premium costs from HIGH-risk to low-risk homeowners
How can low participation rates be improved in Canada where flood insurance is not mandatory? (2)
- Awareness of risk through education
- Lower premiums
Identify reasons that the costs of flood risk may increase over time (3)
- inflation
- climate change (increases flood frequency and severity)
- population growth in flood-prone areas
