Climate changes mean Canada to spend more on disasters : insurers

Reuters News
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Posted: May 18, 2016 12:21 PM

By David Ljunggren

OTTAWA (Reuters) - Canada will have to set aside more money to deal with natural disasters like wildfires, storms and floods as climate change starts to bite, the country's property insurance industry group said on Wednesday.

A wildfire sweeping through the heavily forested oil sands region of Alberta near the town of Fort McMurray could eventually cost C$6 billion ($4.64 billion), according to one industry estimate.

A special fund that Ottawa runs to help provinces recover from disasters covers 90 percent of all eligible costs.

Don Forgeron, chief executive of the Insurance Bureau of Canada, cited a February report by the parliamentary budget officer which said disasters linked to climate change would cost the government C$900 million a year over the next five years.

This amount is far in excess of what Ottawa has currently set aside to deal with such events, he said in a speech.

"That's a problem. That means (money to pay for) damages beyond what the fund can cover will need to be found elsewhere, resulting either in cuts to other programs or an increase in the federal deficit," he said in a speech.

"Climate change ... has moved from future threat to present danger," he said.

The insurance bureau represents more than 90 per cent of all car, home and business insurers in Canada.

A spokesman for Public Safety Minister Ralph Goodale, who is in overall charge of the disaster fund, said he would react later on Wednesday.

Forgeron said the world had entered a troubling new era where natural disasters such as fires and floods were happening more frequently.

Ways to help mitigate the damage include taking steps to better identify risks and then manage them.

"This means limiting or ending the practice of building in areas deemed high risk by flood mapping and having a hard discussion about where to build in areas that are close to our boreal forests," he said.

Building codes also need to be upgraded to make houses more resilient, he added.

(Reporting by David Ljunggren; Editing by James Dalgleish)