The Geological Survey of Canada (GSC) records and locates over 4,000 earthquakes every year. While seismic events happen countrywide, they most often occur along the active plate boundaries off the coast of British Columbia, along the northern Cordillera (southwestern corner of the Yukon Territory), and the arctic margins (including Nunavut and northern Quebec). Earthquakes also happen frequently in the Ottawa and St. Lawrence Valleys, as well as in New Brunswick and off the shore of Newfoundland.
While many Canadians tend to dismiss earthquakes as a western Canada problem, it is in fact a peril that’s felt countrywide. Having said that, western Canada is by far the most seismically active region in Canada, responsible for approximately 1,000 earthquakes each year. According to Earthquakes Canada, the most seismic region is offshore, west of Vancouver Island, where more than 100 earthquakes with a magnitude of 5 or greater have occurred in the past 70 years.
With so many seismic events across the region, it’s no surprise that the earthquake insurance take-up rate in British Columbia is much higher than it is anywhere else in Canada. However, one of the most concerning provinces is Quebec. Global reinsurer Swiss Re once estimated that a magnitude 7.3 earthquake near Quebec City could result in total losses of CA$10.6 billion to residential property alone. And yet, despite the potential for catastrophic loss, homeowners in Quebec are not buying earthquake insurance.
According to an earthquake study conducted by the Autorité des marchés financiers, only about 3% of homeowners in Quebec purchase earthquake insurance coverage, compared to around 40% in British Columbia. In some areas of the western province, like northern Vancouver, the take-up rate is as high as 70%. The disparity in attitudes towards earthquake insurance coverage has been a topic of concern for many years, but key stakeholders – including governments and the insurance industry – are yet to find an adequate solution.
“Government is concerned about the impact of a sizeable earthquake in areas with low earthquake insurance take up rates, such as Montreal and Quebec City. While the probability of an earthquake there is low, the impact would be devastating,” said Dipika Deol (pictured), Head of Underwriting, Canada and English Caribbean, Swiss Re. “Due to the low insurance take-up rates, property owners would struggle to rebuild and both the provincial and federal government would have to step in to finance rebuilding efforts.”
One of the biggest hindrances to earthquake insurance take-up in eastern Canada is awareness. People simply do not understand the coverage. They think their homeowner’s insurance will protect them in the event of an earthquake, and, if not, they expect the government to step in and provide some relief should an event occur.
“While governments are keenly aware of this risk, property owners seem to be less aware, as evidenced by the low take-up rates for earthquake insurance,” Deol told Insurance Business. “The insurance industry does offer EQ protection throughout Canada, but few property owners outside of British Columbia currently buy it. It is clear that earthquake resilience requires collaboration between government and the insurance industry to raise earthquake risk awareness and to find means to increase earthquake insurance take-up rate.”
Insurance brokers play an important role in Canada’s earthquake resilience equation, according to Deol, because they’re the trusted conduits of information and advice. She added: “At the same time, governments have to clearly manage expectations with property owners as to the compensation they can expect from governments following a disaster. Improving earthquake resilience in Canada requires strong collaboration between all key stakeholders, including brokers.”
