Insurance Bureau recommends real estate climate risk index

Access to reliable climate-related data would help homeowners and buyers, builders, the financial sector, and governments, according to a new report by the Insurance Bureau of Canada and Canada Mortgage and Housing, Designing the Path to Compatibility: Climate Risk Disclosure and Action in the Canadian Housing Context.

The IBC found that climate risk disclosure in the housing market is needed due to the increasing frequency and severity of natural disasters.

To aid in this disclosure, the IBC recommends the creation of:

1. A climate score for houses, called the Real Estate Climate Risk Index that would act like a credit or walk score for climate risks, indicating a property's susceptibility to catastrophic loss based on known risk factors. The index would also form the basis for managing and reducing household, community, and municipal climate risk.
2. An Action Matrix so all housing market stakeholders could better understand a location's risk and how to invest in a community to reduce the risk.

The IBC recommends Canada develop a universal climate risk disclosure system by 2025.

The IBC also recommends immediate action steps including:

• updating flood maps and creating maps for all hazards and climate risks;
• creating a risk action matrix for lenders and insurers;
• creating single-source disclosure data that is transparent, reliable and accessible;
• creating a publicly accessible property-level database that stores information about individual property risk and mitigation; and
• ensuring local and regional governments are at the forefront of risk disclosure.

Next steps include exploring MLS® integration possibilities with the Canadian Real Estate Association.