Flood risk lower: city, Insurance rates could drop for west end residents

Posted Jan 26, 2012 By Jessica Cunha

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EMC News - Homeowners hit with rising insurance costs due to flooding could see a reduction in their rates or a renewal of coverage after a meeting between city staff and insurance companies.

Kanata South Coun. Allan Hubley and city staff met with members of the Insurance Bureau of Canada and representatives of major insurance companies to discuss the city's efforts to reduce the risk of flooding in the west end on Thursday, Jan. 19.

"I would hope within a few months this information will start trickling through the renewal process," said Hubley. "That they're going to start realizing that, OK, the risk is down and you're going to get rewarded in one of those areas."

The city dedicated $32-million in water and sewer infrastructure upgrades in the west end, including replacing manhole covers, upgrades to the Hazeldean Pumping Station and drainage system improvements around the west end.

The fixes were announced after 1,500 homes were flooded in the west end in 2009.

A number of the projects were completed last year and many more will be finished this year, said Hubley.

"We're on schedule to get everything done," he said, adding residents should see lower costs when it comes time to renew their policies after all the projects are completed.

"Definitely in a year when all the projects wrap up, then the risk will be significantly reduced and people should see that reflected (in their bills)," he said.

"They do it based on risk assessment. Now they've got the information so they can say not every house in this area has flooded and not every house in this area will flood again."

RATES BASED ON PAST

Pete Karageorgos, manager of consumer and industry relations for the Insurance Bureau of Canada, said the rates are based on past experiences so it may take a while for the infrastructure fixes to be reflected in insurance rates.

"Insurance rates going forward look at how much insurers have paid in the past," said Karageorgos. "Future rates are set on past experience, so if the future experience continues to improve then rates should follow.

"It takes time to see rate movement."

He said there was no "blanket statement" that could be made as to when residents could see a reduction of rates within a certain time period. It's up to each company to adjust its rates.

"It really varies by company because each company operates differently," he said.

As for the meeting itself, Karageorgos said it was a first of its kind.

"It's great to see that the City of Ottawa, and the Kanata area that had experienced significant issues in regards to its infrastructure, started to address those issues," he said. "It's a great dialogue that will ultimately help the residents in the future."

He said the meeting was a model other municipalities could benefit from.

"This may be a great opportunity for other municipalities to see there are other solutions to these problems," said Karageorgos.

ASSESS BY STREET

Many homeowners living in a high-risk area have seen a rise in insurance costs, including on premiums, deductibles and some have lost flooding coverage completely.

Insurance companies generally choose their rates based on postal codes, so a house that has never flooded, but sits in a high-risk area, has higher costs. This is something Hubley said he hopes to see changed thanks to the information provided to the bureau by the city.

"They are moving towards that, where they're going to be able to assess it down to the street instead of by the postal code," he said.

This should help to ease the costs on homes that have never flooded and those that should not flood again when it comes time for residents to renew their policies, said Hubley.

"They told us this was exactly the information that they needed," he said.

This was the first request of its kind the insurance bureau received and a "major milestone" for homeowners, said Hubley.

"No other city has sat down and done this with them," he said. "I think we've helped every resident in this area who's been impacted by this."




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