Is it time for Environment and Climate Change Canada to have a talk with the Insurance Bureau of Canada (IBC) about certain policies surrounding climate adaptation? If ECCC wants to press forward with not just reducing GHG’s and helping people with preparing for more severe weather (climate adaptation), it may want to advise the IBC that where homeowners and property owners are taking steps to prepare for this weather, it should not be held against them on their insurance policies.
For example, we know that failing windows and doors during severe storms can result in significant damage to the home as water and wind are driven in. That’s not exactly a great secret.
When we look at ways of reducing this risk, properly engineered storm shutters (when used) reduce the overall risk of this particular issue by protecting the window (1) against debris and (2) against the pressures of wind against the panes of glass. If we look at risk in terms of probability and impact, then the risks associated with the damage to the home and its content can be argued to be reduced.
The reduced risk should be able to translate into a reduced premium. This, however, is not the case. The argument is made that the insurance company may need to replace the shutters and, for that reason, the premiums are actually increased. In brief, the company’s position is that because there is another asset to be protected, that not only offsets any potential reduction in their risk of a larger payout but also means that they will need to further offset their own risk by increasing the cost to the homeowner.
The net result is a homeowner who would actually be discouraged from taking proactive steps that reduce the impacts in severe weather. Why? To keep their own costs down. While it is understandable that the insurance companies are seeking to balance their own risks (given the payouts generally needed to cover property damage), perhaps it is time that ECCC look at how it can contribute to a solution that would involve (1) helping the insurance companies achieve this balance not on the back of their policy holders, and (2) help homeowners when they are taking those reasonable steps.
Some options may include a tax incentive to property owners (including those who own rental properties) that certain modifications (such as hurricane ties, window improvement, drainage improvement, etc.) can be considered a non-refundable tax credit (say 25% of the cost of the project) as long as the project involves properly engineered and installed products.
Just a thought…