Insurers should not walk away from difficult markets such as flood cover, according to a director from a Canadian mutual insurer.

“In a world of change, flood is now bigger than fire,” The Co-operators Group Director Jack Wilkinson told insuranceNEWS.com.au. “We brought in flood insurance despite other insurers walking away. There is no area of the country we won’t cover.”

Mr Wilkinson was in Australia last week to deliver a keynote address on the role of mutuals at the Farm Co-operatives and Collaboration conference on the Gold Coast.

“We launched flood cover with no government assistance, but we have been working with provincial governments [in Canada] to do something,” Mr Wilkinson said. “We put together a flood product because nobody else would do it.”

The insurance can be added to homeowners’ policies and covers flooding caused by overflow from a body of water, sewer/water back-up and accumulation of surface water caused by heavy rain.

Initially the cover was available in Alberta only, but it has been expanded to Ontario and will be available nationally by the end of next year.  

Mr Wilkinson says insurers have the best data to assess risks. It means some areas will face high premiums.

“Governments let people build on floodplains, so there will be high premiums. We have lost a few customers, but that situation changes once you have discussions with them.”

The Co-operators has talked to councils about managing risks, including putting firebreaks in areas where wildfires are common.

The insurer had significant exposure to this year’s Fort McMurray fire. Mr Wilkinson says mining areas with firebreaks were almost untouched compared with residential areas.

“We haven’t tried to withdraw from insurance markets where there were higher risks,” he said. “Providing cover is the right and proper way to deliver value to people.

“Insurers have a moral responsibility to work with the authorities to deal with these problems… we have been innovative as a co-operative insurer. But we cannot force the industry to do the right thing.”

As in Australia, many Canadians are underinsured. Mr Wilkinson says this creates opportunities to find products for them.

“Insurance is not without risks, but we have chosen to provide cover for areas such as flood.”