Thank you, Chair.

I'm pleased to be here today on behalf of the Insurance Bureau of Canada and its members to speak about our advocacy on climate change as it relates to the impacts on the Canadian financial system.

IBC is the national industry association representing home, auto and business insurers. Our members make up the vast majority of the property and casualty insurance market in the country. For 60 years, IBC has worked with governments and insurance regulators across the country to help make home, auto and business insurance available and affordable for Canadians.

The reality is that Canada is becoming a riskier place to live, work and insure due to the level of risk we face from extreme weather events as a result of climate change. To date, regulatory discussions concerning climate risk disclosure, and ongoing work to establish a green taxonomy, inadequately consider physical risk and have overemphasized transition risk in relative terms. For a country where natural disasters have consistently disrupted economic activity, this emphasis should be reversed.

Last summer, as wildfire smoke from Quebec blanketed Ottawa and parts of the eastern seaboard, I walked outside with my four-and-a-half-year-old son, who said, “Dada, it smells like camping.” In 2023, Canada faced the worst wildfire season in its history, with over 6,600 fires that burned more than 18.5 million hectares, forcing the evacuation of at least 155,000 people from their homes, all at a cost of more than $1.4 billion just to fight these fires. These wildfires led to the cumulative release of CO2 equivalent to the global airline industry's emissions in a year. The challenge we are faced with right now is that 2024 could be even worse.

We are also seeing that flooding events are becoming more severe. As of today, 1.5 million households in Canada are built in areas with a high risk of coastal, riverfront or urban flooding. These households lack affordable and adequate home insurance. Over the past eight years, IBC has advocated, in partnership with our industry, for a low-cost national flood insurance program for high-risk households in order to close this protection gap. Budget 2024 confirmed that the government intends to launch such a program in 2025.

Last year, severe weather events in communities across Canada cost $3.5 billion in insured damage alone, one of the highest annual totals in the previous four decades. However, unlike in 2016, when a huge wildfire ravaged Fort McMurray and caused a quarterly contraction in national GDP, the losses last year weren't attributed primarily to a single catastrophe. Instead, climate-related disasters affected almost every part of Canada.

Because of the threat of more frequent and intense natural disasters in all parts of the country, we support the federal government's commitment in budget 2024 to develop a green taxonomy, which represents an opportunity to catalyze new investments. However, our industry believes the greatest challenges in this country are the physical risks we face from climate change, and that greater efforts are needed to focus on driving capital to enhance resilience.

Canada's P and C insurers have been at the front lines of climate change for many years, sounding the alarm with governments and regulators, proposing policy solutions, and pricing and managing climate risks. In fact, OSFI recently highlighted the industry's leadership in the “what we heard” report following their survey of financial institutions' readiness to implement guideline B-15 on climate risk management.

The report notes that P and C insurers are further ahead than other financial institutions in establishing climate-related risk reporting and metrics, and it recognizes P and C insurers' experience in managing physical risks, such as weather-related and natural catastrophe risks. The report also found that P and C insurers are further ahead than others on formalizing climate-related roles and responsibilities for board members and senior management.

As we reduce our emissions, Canada must also urgently improve its climate defences. This includes investing in new infrastructure to protect communities from floods and fires, improving building codes, ensuring better land-use planning and increasingly creating incentives to shift the development of homes and businesses away from high-risk areas.

Further, to rapidly advance resilience measures, IBC co-founded Climate Proof Canada, a national coalition that I am fortunate enough to chair, which has played an important advisory role in helping establish the country's first national adaptation strategy.

For more than a decade, IBC has been warning governments about the need to be better prepared for severe weather events as a result of climate change. We believe Canada must play both offence and defence when it comes to climate change and take action today to protect Canadians from the growing threats to their homes and well-being.

We look forward to this committee's continuing study of the environment and climate-related impacts on the Canadian financial sector, and the role that property and casualty insurers are already playing.

Thank you for the invitation to speak, and we look forward to your questions.