Canada: How earthquake risk and awareness compare coast to coast

Source(s)
Insurance Business Online, Key Media

By Alicja Grzadkowska

After severe hurricanes made landfall in the southern US this year and wildfires continue to rage in California, it’s easy to forget that there’s a natural catastrophe risk with the potential to demolish homes and businesses, and lead to massive losses lying low right under Canadians’ feet. Those on the west coast are already prepared for an earthquake should it strike – after all, the Great BC ShakeOut, British Columbia’s biggest earthquake drill presented by the Insurance Bureau of Canada (IBC) and the BC Earthquake Alliance, only took place a month ago.

Eastern Canada is a different story altogether. Awareness in provinces like Quebec and Ontario around earthquakes is “severely lacking,” even as their loss-inflicting potential is huge, according to a Swiss Re report, “Earthquake Risk in Eastern Canada: Mind the Shakes.”

“The earthquake hazard is not as prominent in eastern Canada, so there have been earthquakes in the past,” said Balz Grollimund, head of the treaty underwriting team for Canada at Swiss Re, “but, they have [happened] further in the past and they have been of not as large a magnitude as is speculated for an earthquake occurring in western Canada. However, the difference in eastern Canada is that earthquakes could be much closer to the actual buildings, the actual cities, because those faults are onshore.”

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Another key difference between the coasts is a level of preparedness for a ground-shaking event. Take-up rates for earthquake insurance in eastern Canada fall at a measly 3.4% of all homeowners, compared to 65% in Vancouver and Victoria in BC. Households in Quebec and Ontario are thus heavily exposed to uninsured losses, despite the clear damage that earthquakes can cause. If a magnitude 7.3 earthquake were to occur in the Charlevoix seismic zone, the total economic loss from the earthquake would be around 8% of Quebec’s GDP, or $30 billion, according to Swiss Re’s estimates, which take into account residential losses as well as damage to commercial and cultural property, infrastructure, and indirect losses.

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