Three years ago, Canada’s federal government committed funds to build a new national flood insurance program. Since then, public announcements regarding progress on the file have been sparse.
What’s the status of the proposed flood insurance program?
The federal government continues to engage with the property and casualty insurance industry, provinces, and territories on the design of a national flood insurance program, says the Insurance Bureau of Canada (IBC). That work includes exploring how a backstop would function alongside expanded flood coverage offered by Canada’s private home insurance market.
“I know there’s been sustained technical work within government to explore the parameters of a program,” Liam McGuinty, vice president of federal affairs at IBC, tells Canadian Underwriter. But any flood program entered into today will “need to be tightly scoped to the highest-risk households,” he adds, since Canada is “no longer dealing with a broad absence of coverage.”
In Budget 2023, Ottawa allocated $31.7 million to support flood mapping and other foundational elements of a national flood insurance program. That was followed by a $15-million commitment in Budget 2024 to advance implementation, including plans to establish a reinsurance mechanism through the Canada Mortgage and Housing Corporation (CMHC). Budget 2025 included broader climate resilience funding, including a proposed $51-billion infrastructure fund over 10 years, but did not include any updates on the national flood insurance program, Ratehub reported.
Different market, narrower challenge
The flood insurance landscape has changed significantly since Ottawa first began considering a national program in the years following the 2013 Calgary floods, McGuinty tells CU.
“We started talking about this program in earnest four or five years ago, and over the course of that time, the private overland flood insurance market has responded,” McGuinty says.
“And so we’re at the point where today insurers are writing into roughly the 94th risk percentile of overland flood.”
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What remains is “a much narrower challenge,” he adds, “concentrated in the highest-risk properties.”
“For that reason, our message to government over the last seven, eight months, has consistently been that any design parameters of a flood program must take into account the evolving nature of the private overland flood insurance market,” McGuinty says. “It’s a market that is increasingly functioning as it should.”
Any future program would need to complement the private market, he adds, as expansion of coverage has “changed the nature of the problem policymakers are trying to solve.”
No rush to implement, but no room for complacency
IBC says there is no need to accelerate implementation at the expense of design.
“They need to take the time to get this done properly. Getting the design right matters much more than rushing to implementation,” McGuinty says.
While 2025 has been a relatively benign year for major catastrophe losses, longer-term trends remain clear. Wildfire losses, for example, have increased by 1,000% over the past 20 years, McGuinty says, adding IBC has been in talks with government over the last few months on broader systemic risks, including earthquake exposure.
“Our collective job is to make sure consumers and governments at all levels understand these trends,” McGuinty says.
Insurance only part of the solution
Flooding remains Canada’s most common and costly natural disaster. And yet, Intact Insurance data shows 62% of Canadians aren’t worried about flood risk.
“Insurance alone can’t solve our flood problem in Canada,” McGuinty says.
IBC is urging governments to take a broader view of flood risk that goes beyond insurance. That includes limiting development in high-risk flood zones, an issue that has taken on new urgency as governments across Canada push to build 3.87-million new homes by 2030 to address affordability.
New research from the Canadian Climate Institute estimates more than 540,000 homes could be built in areas exposed to flooding, potentially adding up to $2 billion a year in additional flood-related damages.
“We’re supportive of building quickly, but we’re setting ourselves up for heartbreak if we’re building in the wrong places,” McGuinty says.
Instead, IBC is calling for stronger investment in resilience measures, including improved flood mapping, infrastructure upgrades, stricter building codes and more disciplined land-use planning.
Editor’s Note: This article has been updated to correct Liam McGuinty’s title. He is vice president of federal affairs, not vice president of strategy, as previously reported. CU apologizes for the error.