Tax levies, subsidies could pay for high-risk flood insurance, report says
'After a spring of devastating flooding, Public Safety Canada will consider a proposal to place levies on municipal taxes as a way to provide high-risk insurance to homeowners who aren't eligible and can't afford it. CBC News obtained an advance copy of the report, which will be released Tuesday morning. It provides policy options to reduce the ballooning costs of destructive floods to homeowners and taxpayers.
The Insurance Bureau of Canada authored the report at the request of a provincial/territorial and federal working group that addresses flood risk management. Titled Options for Managing Flood the Costs of Canada's Highest Risk Residential Properties, the report presents several policy considerations. One of them involves creating a high-risk pool of homeowners who are currently ineligible for flood insurance.
These homeowners would still pay premiums. But in order to make sure their premiums are affordable, they would be subsidized by a mix of government grants and levies. IBC's vice-president of federal affairs, Craig Stewart, knows the concept of homeowners subsidizing people who live on scenic rivers and lakes seems controversial. But he says only homeowners who can't afford to rebuild would be eligible. Currently, when disasters hit, wealthy and low-income homeowners receive disaster relief bailouts.
"Right now taxpayers are subsidizing everybody that gets bailed out by a flood," Stewart said. "At the end of the day it is governments that are bailing people out. We need a solution that people are paying for the risk that they face. And only those who are at low incomes are subsidized to a degree for that risk."
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- Long-term, this makes no sense. Every penny spent on damage repair will only be spent again with future floods.
- Help those in flood plains? YES: use all taxpayer-funded financial assistance to move homes to higher ground. If they refuse to move, they're on their own: no taxpayer assistance.
- In the long run, the most cost-effective expenditure spends ONCE — not repeatedly.
- IBC has good reason to propose this short-sighted plan. It perpetuates IBC profits at taxpayer expense, without addressing the cause: homes in flood plains.
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