The need for disclosure of natural hazards and climate risks is urgently needed in Canada’s housing market, according to new research from the Insurance Bureau of Canada (IBC).
Due to the increasing frequency and severity of natural disasters, IBC recommends creating a house climate score. Like a walk score, the climate score or the Real Estate Climate Risk Index would indicate a property’s susceptibility to catastrophic loss based on known risk factors.
In the Fall of 2021, IBC invited leaders from across the housing supply chain to develop a framework to communicate natural hazards and climate risks to homeowners and tools to use across the housing finance and insurance sectors.
In a press release, Craig Stewart, vice president of Climate Change and Federal Issues at IBC, says, “Canada must develop a universal climate risk disclosure system by 2025. We simply can’t wait until 2050 to be climate-compatible in the housing sector. Immediate action must be taken to protect homeowners and communities, or catastrophic loss to homes and communities will continue to increase in severity and cost, year after year.”
In addition to the climate risk index, the report recommends developing an Action Matrix. It would allow all housing market stakeholders to have a universal view of a location’s risk and to understand how to invest in that community to reduce the risk.
