The Generals - Fall/Winter 2013 - (Page 26)

FEATURE INSURERS and CONTRACTORS: Working Together to Support Investment in Critical Infrastructure By Ralph Palumbo, Vice President, Ontario- Insurance Bureau of Canada L ike the construction industry, the property and casualty (P&C) insurance industry is an engine of economic growth in Canada. Beyond providing insurance to mitigate the risks of owning a home, business or automobile, the industry advocates for solutions to issues that affect the viability and cost of the insurance product, such as the impacts of severe weather. The insurance industry is acutely aware of the devastating and costly consequences of severe weather. Based on 2012 estimates, water damage claims alone have soared to $1.7 billion annually in Canada. More importantly, severe weather results in people losing their homes or automobiles, and having their businesses interrupted for a period of time. And it’s not going to get any better. A 2012 study commissioned by Insurance Bureau of Canada (IBC), Telling the Weather Story by Nobel Prize-winning climatologist Dr. Gordon McBean, indicates that Canada can expect more extreme weather in the next 50 years with warmer summers, more heavy precipitation and more flash flooding. Infrastructure Woes As risk management experts, insurers are perfectly positioned to help identify the real impact of severe weather and develop ways to adapt to it. While there is no single quick fix, an area of particular concern is Canada’s aging infrastructure at every level and its inability to withstand the increase and severity of weather events. There’s more than enough reason to sound the alarm. In September 2012, the Canadian Infrastructure Report Card, a joint project of the Canadian Construction Association, 26 As risk management experts, insurers are perfectly positioned to help identify the real impact of severe weather and develop ways to adapt to it. the Canadian Public Works Association, the Canadian Society for Civil Engineering and the Federation of Canadian Municipalities (FCM), collected data from a survey of 123 municipalities where 60 per cent of the Canadian population lives. The report card provided information on a number of factors, including the physical condition of the infrastructure, available capacity, value of the infrastructure systems, and types of management systems that are used to collect information and make infrastructure investment decisions. The report card yielded some startling statistics: 50 per cent of Toronto’s sanitary sewer system is more than 50 years old; 50 per cent of Toronto’s water mains are over 55 years old; and 27 per cent of Ottawa’s piped infrastructure is 40-plus years of age, with 50 per cent being between 20 and 40 years old. Investment in modern infrastructure is synonymous with Canada’s economic competitiveness and quality of life. However, the $33-billion Building Canada Plan is scheduled to expire in March 2014. Infrastructure Canada is currently engaging provinces, territories, the FCM and View this issue online at other stakeholders to shape the development of a new long-term infrastructure plan. For its part, IBC is advocating for the inclusion of severe weather adaptation in government strategies at every level and ensuring that infrastructure is a priority in future spending. The Right Tools Leadership, co-operation and ingenuity are the key principles in developing adaptation strategies. To that end, IBC is taking a comprehensive approach to severe weather adaptation by encouraging governments to: • Assess and upgrade infrastructure, particularly critical water and surface water infrastructure; • Review and update land use policies; and • Strengthen building codes. IBC is also investing in a long-term, sciencebased research program that identifies best practices for the design and construction of new homes (The Insurance Research Lab for Better Homes, University of Western Ontario). The biggest challenge for the insurance industry is that no tool exists to help quantify the risk being underwritten with respect to the levels of water damage experienced. If a risk can’t be quantified, it can’t be insured effectively. The industry has developed the municipal risk assessment tool (MRAT) to obtain quantitative data that will provide accurate information for underwriting risks related to water damage caused by sewer backups. The goal is for the tool to use a top-down approach. A validated risk formula would, for a given municipality, combine risk indicators with present and future climate return periods, and represent risk zones on a geographic information

Table of Contents for the Digital Edition of The Generals - Fall/Winter 2013

Chairman’s Message
President’s Message
Incoming Chairman’s Message
Upcoming Events - In Memoriam
Mitigating the Risk of Subcontractor and Supplier Default
Glen Murray Has Cause to Pause
Healthy Competition: Staying Onside the Competition Act through the OGCA’s New Compliance Program
Insurers and Contractors: Working Together to Support Investment in Critical Infrastructure
Thank You to Our 8th Construction Symposium Sponsors
Prompt Payment Legislation and the General Contractor
75th Annual General Meeting & Conference
Index to Advertisers

The Generals - Fall/Winter 2013