Earthquake risk has become one of the insurance industry's most closely watched topics in Canada, surfacing again as a central theme when OSFI Superintendent Peter Routledge and Insurance Bureau of Canada President and CEO Celyeste Power sat down for their now-annual fireside chat at this year's National Insurance Conference of Canada in Quebec City, following a similar discussion at last year's event that centred on a joint tabletop exercise to stress-test the country's capital resilience against a severe quake.
That national conversation about how prepared Canada actually is has a direct parallel in how insurers think about the risk at the ground level, according to James Gasco, head of Canada at Swiss Re Corporate Solutions.
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The risk of a major earthquake disrupting the Port of Vancouver isn't a distant hypothetical, Gasco said. The port sits within the influence zone of a fault line capable of generating a catastrophic megathrust event, and the exposure extends well beyond the port's own terminals.
"We can't predict when a major earthquake will occur, but the risk is very real," Gasco said. "The Port of Vancouver sits within the influence zone of the Cascadia Subduction Zone, which is capable of generating a magnitude 8 to 9 megathrust earthquake."
The danger isn't confined to the port itself, Gasco told Insurance Business. A major event could simultaneously affect port terminals, Vancouver International Airport, highways, rail corridors, utilities, distribution centres and other infrastructure across the Lower Mainland all at once.
Given Vancouver's role as Canada's largest port, the consequences of a major disruption wouldn't stay contained to British Columbia, Gasco said. The port serves as a critical gateway for containerized goods, bulk commodities, energy products, agricultural exports and manufactured imports moving across the country and internationally. Any prolonged disruption to that gateway, he said, would ripple through supply chains well beyond the businesses that ship directly through Vancouver, since so much of the goods movement passing through the port ultimately feeds into national and international distribution networks that depend on predictable timing.
"Even a partial loss of capacity could create cargo backlogs, force goods to be rerouted, increase transportation and storage costs and create shortages or delays for businesses that depend on the gateway," Gasco said. He pointed to disruptions elsewhere in the world as a preview of how that congestion could spread, potentially pushing traffic toward alternative ports and transportation routes.
For businesses far removed from the physical damage itself, the fallout could still be significant, Gasco said, citing contingent business interruption, contractual penalties, lost sales and higher costs, even for companies whose own facilities never suffered direct damage. That distinction matters for how businesses think about their own exposure, since a company with no physical assets anywhere near the Lower Mainland could still absorb real financial losses if a supplier, customer, or logistics partner relies on the port to move goods on schedule.
While British Columbia represents Canada's most significant seismic exposure, Gasco said the risk isn't confined to the Lower Mainland alone. Vancouver International Airport carries similar exposure as a regional transportation hub, and a major Cascadia event could hit highways, rail corridors, utilities and intermodal connections across the region simultaneously.
"The risk needs to be considered as a network rather than facility by facility," Gasco said.
Earthquake risk extends to other parts of the country as well, Gasco said, pointing to the Charlevoix Seismic Zone northeast of Quebec City and the Western Quebec Seismic Zone spanning the Ottawa-Montreal corridor. Events in those zones tend to be less frequent and smaller in magnitude than a Cascadia event, he said, but their proximity to major population centres, transportation corridors, utilities and critical infrastructure still makes them worth watching. That geographic spread, he said, is a reminder that seismic risk in Canada isn't a single-coast problem, even if the scale of a potential Cascadia event makes British Columbia the most closely watched exposure.
Gasco was careful not to characterize any specific transportation node as underinsured without direct knowledge of its coverage arrangements.
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"We would be cautious about describing individual transportation nodes as 'underinsured' without assessing their specific insurance arrangements," Gasco said.
The scale of a potential Cascadia event, and the interconnected nature of the infrastructure it could affect, is why Gasco frames the risk less as a single-site problem and more as a systemic one. A major earthquake wouldn't just damage the port; it could simultaneously strain the airport, road and rail networks, and utilities that businesses across the supply chain depend on to move goods and recover operations.
That interconnected exposure, Gasco said, is also why the conversation increasingly extends beyond how quickly physical infrastructure gets repaired.
"Resilience isn't only about whether an asset can ultimately be repaired or rebuilt," Gasco said. "It's also about whether an organization has the financial resources to make decisions quickly in the first days and weeks after an event."
