Water, water, water

Welcome to Risky Business Commercial Insurance with Butler Buyers. This is Paul Martin, the business commentator, and joining me today, Colin Rooke, Commercial Risk Reduction specialist with Butler Byers. And Colin, the news has been filled with catastrophic events of all kinds, and normally at this time of year we’re talking wildfires, but it’s a change of pace this year. We’re talking water, water, water.

There’s floods in Toronto from the tail end of that hurricane. There’s the water main break in Calgary, the one in Montreal. I mean it’s all about the elements of wind, earth, fire, all that stuff. And let’s talk water today. The water part floods water main breaks, I guess probably more specifically when a city’s water main breaks, we don’t think much about insurance on that one, but yet I guess many businesses were confronted with interruption in business, that kind of stuff. There really are a lot of insurance implications. Anytime you talk about one of these natural disasters or a major infrastructure catastrophe.

I’m understanding that there are experts who are saying the system that we have built here in Canada with basements because we want to get below the frost line to put all our pipes and that sort of stuff. And people have grown accustomed to having basements and rumpus rooms and all of that stuff. We do walkout houses now or the premium houses. And you’re saying they’re experts are saying, we should maybe rethink the whole notion of a basement altogether.

Yeah, and if you think about, or the traditional basement, when people were first putting in basements, these were cellars. This was a cold, damp area that would frequently flood. There’s moisture issues, but the home was constructed where it wouldn’t impact the structure upstairs. And then people said, well, we want to maximize the livable space. Let’s frame out those walls. Let’s pour some concrete and we’ll live down there. Now, from a practicality standpoint, it makes a lot of sense. You get more room, more usable space. However, it’s horribly inefficient from a rainwater or a seepage perspective. And you could see now you’ve got larger houses sitting deeper in the soil because now we’ve got 9, 10, 11, 12 foot ceilings, we’ve got walkouts, we’ve got new development over top of swamp land that’s impacting those. And the reality that no one wants to talk about is if we want to start mitigating a lot of this water damage, or at least flooding, is we got to say goodbye to the basement. It’s a very, very Canadian thing to have a basement, but it’s also a very, very Canadian problem when it comes to claims. But steps need to be taken.

It’s ironic. I was traveling in one of the suburbs in Phoenix a couple of years ago, and it was a new division subdivision being built, excuse me. And there was a sign that said, basement’s available on request. I mean, it’s not a standard thing down there because they don’t worry about frost lines and what have you. But apparently they were getting so much demand from snowbirds who are accustomed to the basement. They actually now made it available. And it wasn’t an option that was just normal for people who live in Arizona on an ongoing basis.

And there’s work that needs to be done with the insurance industry. There’s a term where, or really a policy requirement, that you need to reconstruct the home in the event of a claim you’re not as it was. And so if the insurer is saying, well, we’re only going to pay for what you had, we’re not going to pay for a version that’s going to mitigate water, then how does this get better? So if we can’t remove this requirement to have identical reconstruction, then how do we get to a place where people are learning if I eliminate the basement or at minimum reduce, change the basement, make it, I don’t want to say less livable, but a place where you might be able to congregate, but there’s not really a lot of stuff that can be damaged down there, less finishing, but the industry hasn’t done a great job of that. And of course there’s not a lot of education around this identical reconstruction, and therefore the issue remains.

Alright. I want to keep on this theme of natural calamities or catastrophic events that nature’s been delivering. And I want to come back to water in a minute, but let’s just take two minutes here before our break to talk about the Jasper wildfire. Fires are still something we’re dealing with. We’ve got evacuations in this province. It’s clearly, it’s another one of those years where we’re perhaps not the worst year, but certainly it’s a severe year. What’s the insurance industry seeing here?

Yeah, just to give you some context, I’ve referenced Intact Insurance before on the show, and I do that because they’re Canada’s largest insurer. So then they’re going to have, if they’re giving estimates of their costs of these types of events, it gives you just a pretty good idea of the overall cost. And I believe they’re in the 960 million range estimate just for damages due to the Jasper wildfire. So it’s a really big deal. It’s funny because we’ve had so many water related events that somehow it’s been, I’ll say in our world, it’s sort of been overshadowed by the water losses. Obviously historic Jasper, it’s a really big loss for the country, but there’s just been so many water. We had record rainfall in downtown Toronto, I mean at levels that have never been seen before. And then it happens again in the province of Quebec. So it’s big event, big losses, but pales in comparison to the water related losses.

Alright, well, we’ve got to take a little break. So we’re going to come back and talk more about water in just a second. You’re listening to Risky Business Commercial Insurance with Butler Byers. I’m Paul Martin. We’ll be back after this.

Welcome back to Risky Business Commercial Insurance with Butler Byers. My guest today is Colin Rooke, Commercial Risk Reduction Specialist with Butler Byers. Colin, we’ve been talking about natural disasters, it seems this is that time of year when we get it, we see them in Canada. We’ll be in the next few months probably hearing typhoons and hurricanes everywhere. But when it comes to the Canadian season, it’s all about fires and floods in the summertime. Now I want to come back to that Toronto one, but in a minute. Everybody who’s probably purchased an airline ticket this summer has been affected by the Calgary hailstorm, the one that took out so many of the damaged the airport. I mean that put holes in the roof took, I don’t know how many of WestJet’s planes offline, and they’re only starting to bring them back now, the first one or two. That was a big one, wasn’t it? And we’ve talked on this show before. If you live in Calgary, it’s a hundred percent guaranteed you’re going to have a hail storm.

It is. And so in 2020, actually around this time we are doing this show and talking about a hailstorm event that caused about 1.2 billion dollars worth of damage. We were then talking about the resilient roofing program that was created to help mitigate the damage to the structures of Calgary. And we talked about a guide that we have. We still have this guide talks about what kind of roofing you need, how to install it, the angle, what’s good for hail, what’s not good for hail. We dispelled a whole bunch of myths, and we talked about specific roofing that would reduce the amount of hail damage by, I want to say it’s 16 to 20 times. And then there was funding available that would mitigate the increased cost to put on this type of roofing. So it seems like a no brainer. However, and the point is not to pick on the city of Calgary in this program, but once the set aside funds were exhausted, it was not renewed.And then here we are four years later with a larger storm that is going to cause more damage than that of the storm in 2020. And then it just brings back the whole debate that we need to be thinking of weather related incidents like hail and building houses and maybe changing code for more hail resilience because after losses like this, insurers start to pull out of markets. And four years is a long time in the insurance industry, but this is fresh and you are going to see impacts from this storm across Canada. You mentioned the grounding of the WestJet flights. There are 16 planes that had to be pulled from the fleet, and I don’t believe there were any planes pulled from the fleet in 2020. So this was a larger size hail. The duration was longer, there was more water. But the city has a ton of damage, and I believe that it’s time to bring back these programs that encourages people to build more resilient homes.

It seems almost ironic or contradictory, doesn’t it, that we’re talking about too much water and hail at the same time as we’re talking catastrophic wildfires. And we even had one just on the outskirts of Saskatoon that took out a couple of houses and they used to be something you would see in the history books. Now all of a sudden they’re back and they’re with us. And earlier in a previous program we talked about there are things you can do to protect your property in the event of a wildfire. You’ll see the video footage after the fire is out and you’ll go down the street and every house is gone except one. How did it magically get missed? And in fact, it’s not magic at all. It has to do with the conduct of the homeowner.

Back to the risk work that we do at Butler Byer’s Insurance, we talked about that very premise as well. And we also have a guide, we have several guides actually, that will walk you through how to protect your residential property, your commercial property, how can you be the most likely to be the one that’s still standing after the fire the Blaze has gone through. And a lot of it seems like it could be common sense, but it’s just not well known and people just aren’t doing what’s required. But we can help with all that.

And just a reminder, that’s all free of charge. People can just call you up and you’ll provide them with that information.

That’s right. We’ll just explain what you need to do to become a better risk to the insurance market. And I do want to add another thought when it comes to these weather related events. So you’ve got insurers that are collecting claims data, and you’ve got municipalities obviously, that are recording these storms. But another challenge in our industry is the communication between the two. If you have municipalities working with insurers, developing these programs, sharing their predictive modelling systems, talking, really having a say on building code, we could start to turn the tides here. And I don’t really have a solution beyond just pointing out that if the two would work together, I think that this could improve. And being in the insurance industry, nobody likes increased rates. However, the insurers have to charge what they need to , to recapture the losses. So something has to be done if we’re going to go in the other direction and it has to be education. It has to be an industry-wide effort on improving the overall risks.

Well, that has been a theme of this program ever since we began, which is helping property owners, people in business, commercial operations. How do you become a better customer of the insurance industry? I mean, when we go to buy any product, but insurance in this case, I mean, what are we looking for? Best rates, best coverage. And the insurance company is prepared to go part way on that with you as long as you’re the best risk. And so this is what we talk about is how do you make yourself a better customer of the industry? And that’s what your step-by-step guides allow people to do. And I am thinking when we see these wildfires, for example, if you’re a cabin owner or a cottage owner or something, you must, this should be top of mind instantly for sure, especially if you’re in a wooded area.

Yeah, the information’s out there. And if enough people work, so certainly in the home insurance field, if enough people put the effort in to become better risk, you will see rates go the other way. But maybe you can’t impact that. Maybe there’s just too many people not prepared to put in the effort. It’s never worth going through a claim. So if there’s anything you can do to reduce that, just to save the time, the headache around navigating a loss, being on the claims end of things, it’s worthwhile. And we’re full of information.

Listen, we’ve got about a minute left before we go. And I just wanted to touch one more time on those massive floods that hit Toronto. I mean, we kind of coupled into this as just society or our current society’s ability to maintain the infrastructure that’s needed to manage all of this stuff too. But are there observations that any learnings we have from the Toronto floods earlier this year?

Yeah, I mean, it’s sort of the similar message that we have to change the infrastructure. We have, the draining, the drainage is not good enough for Toronto, though. The way the buildings are built, it’s not good enough and it’s easy to fixate on just one particular rainfall. But then they had follow up storms throughout the week that were almost equivalent to the record breaking rainfall. So again, this is a trend. Yeah, sorry, just looking at the data, 157 millimeters of rain at Trudeau airport, but then a few days later, they had another 120 millimeters, and both of those are up there as one of the heaviest rainfalls ever recorded. And so we got to start looking at again, getting out of basements, rebuilding homes differently, upgrading infrastructure and changing the way we use buildings.

The simple fact is 10 inches of rain in a week, you’re going to have insurance claims. Welcome to reality. Right?

Exactly.

You’ve been listening to Colin Rooke, Commercial Risk Reduction Specialist with Butler Byers. I’m Paul Martin. This is Risky Business. Thanks for joining us, and we’ll talk to you next time.