A very underrated flood bill

When a basement sofa floats in a flood, frustration and stress take longer to fade than brown water.

However, the mental health bill does not make headlines after disasters. The problem is that even when experts do it with innovative mathematical models, it’s much less easy to measure.

We already know that the mid-July floods in Ontario cost insurers more than $940 million in damages. In Quebec, the amount of rain that fell on Aug. 9 prompted 70,000 claims, which are expected to turn into multi-million bills for insurance companies… and higher premiums for everyone.

Astronomically, these figures represent only a fraction of the costs associated with floods or other natural disasters, as victims’ mental health is as damaged as their furniture.

Stress, post-traumatic stress, anxiety, insomnia, financial insecurity, frustration with waiting times, family conflicts, inability to work. .

In other words, increased flooding with climate change puts pressure on group insurance plans that reimburse drugs and cover wages in case of illness. General Medicines Insurance (RAMQ) is not expressly left out.

What’s interesting is that educators are able to translate the psychological impact of catastrophic events like floods into dollars. One of them, Michaël Bourdeau-Brien, is a professor in the Department of Finance, Insurance and Real Estate. Laval University. I attended a very informative lecture by him on this subject at Ilaven. I remembered him after watching on television the distress on the faces of the victims after a water pipe broke at the foot of the Jacques-Cartier bridge.

Study¹ In the 196 pages he co-produced on the effects of the floods in Quebec in 2019, Sainte-Marthe-sur-le-Lac helps uncover the disturbing testimonies of the victims, which says a lot about their psychological state.

Using complex economic models, researchers were able to determine that taking on debt after a disaster doubles the prevalence of depression. But their most significant larger conclusion is summarized as follows: the financial value of intangible damages may be as important as, or nearly so, the value of physical damages.

“On average, what’s important here is that someone who damages $100,000 worth of property has a good chance of loss of productivity, impacts on their mental health and their enjoyment of life. Another $100,000 is equivalent. This goes to show how significant this damage is. It’s not anecdotal,” he says. Mr. Porto-Brien.

Therefore, according to him, if disasters become more frequent and severe, it can expect “questions about the effectiveness” of public and private health insurance schemes. One thing is for sure, someone has to foot the bill. Hence the cost of group insurance may be higher due to extreme weather events.

Private insurers are aware of the problem and are monitoring the situation “very closely”, they confirmed to me through their association (ACCAP), adding that at the moment, they have no studies proving that climate change is having a “significant impact”. ” on their profession.

Beyond insurance, there are other good reasons to calculate the cost of psychological effects. One of them: improving decision-making when investing in public infrastructure such as seaweed farms or retention basins. By taking into account only quantifiable impacts, cost/benefit analysis can be “biased” and the best projects can then be rejected, explains Michael Bordo-Brien.

What a vicious circle! Solutions that prevent water from entering homes can be avoided because they do not take into account the psychological impact of natural disasters.