Earthquake News

Is earthquake risk being underestimated in Canada?

Every year, around 4,000 earthquakes strike Canada. People in Western Canada are anticipating "The Big One," the next Cascadia subduction event in which the Juan de Fuca plate subducts beneath the North American tectonic plate with enough force to cause catastrophic devastation over southwestern British Columbia, including Vancouver and Victoria.

According to an official study, there's a 30% chance that something big – perhaps "The Big One" – will happen in the next 50 years and if it happens, the Insurance Bureau of Canada (IBC) estimates that the total expenses of a 9. 0-magnitude earthquake in British Columbia might approach $75 billion. In eastern Canada, near the St. Lawrence Seaway and in the Montreal/Ottawa area. According to the IBC, a strong earthquake will strike in the region from the St. Lawrence River Valley to the Ottawa Valley – which includes Quebec City, Montreal, and Ottawa – within the next 50 years. Despite the fact that the risk of earthquakes is significant in Canada, the number of people who get earthquake insurance is still low. Despite the potentially disastrous effects of a big earthquake, politicians, insurers, risk managers, developers (and others) have paid less attention to earthquakes in recent years than other risks such as flood and wildfire.

Panel moderator Mohit Pande, head of property underwriting for US & Canada at Swiss Re, raised the question at Swiss Re's 36th Annual Canadian Insurance Outlook Breakfast: Is the risk of an earthquake in Canada being undervalued? "I think traveling through anything like a really powerful earthquake is going to be pretty tough for Canadians and industry," said Monica Ningen, president and CEO of Swiss Re for Canada and the English Caribbean. I believe it is being overlooked in terms of our time and attention, in part because we see some of these secondary threats [such as flooding] having an impact on communities and our financial statements, and our attention is drawn to them.

When it comes to natural disasters like earthquakes, Ningen believes that "it's not if, but when. She hopes the "when" isn't during the "fragile situation that we're currently in from a pandemic and economic aspect," as she described it. "I would encourage all of us to think about what that looks like, and continue to work hand-in-hand with the government on the earthquake file," she continued, "because... when we actually experience it as communities and as an industry, it will be difficult for all of us to find our way through it. And the better prepared we are, the more likely we are to emerge victorious, not just with strong balance sheets, but also with resilient communities.

Friend and panelist Mike Mitchell, head of Swiss Re's property and specialty underwriting reinsurance, was the company's head of Asia-Pacific through two big earthquakes in the region: the 2011 Christchurch and Tohoku earthquakes in New Zealand and Japan, respectively. "I think there's always a human inclination towards immediacy over importance," he remarked. I believe we have a natural propensity to focus on what is most important to us at the time. "Clearly, earthquake preparedness is a far more substantial challenge than being prepared for more atmospheric phenomena.

Physical preparations that you may undertake as an individual [and as a company] are far less evident and fundamental. According to Mitchell, earthquakes are a threat that "will always be with us," and that will hit with considerable effect and destruction from time to time. "I think it's critical to guarantee that not only do we have the core economic preparedness for earthquake damage," he added, "but also that we're extremely mindful, as we discovered in Christchurch, that when we're creating cities and societies, we're building in a resilient and sustainable manner. "It's crucial that we take the lessons that we can learn from Christchurch, particularly in terms of urban planning and having a really solid, high level of insurance penetration.

The New Zealand economy, and the New Zealand government, are both very pleased of having been able to pay almost 80% of the economic losses caused by the Christchurch earthquake [... ] I believe that is a record that will not be matched by many countries throughout the world.

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