Canada is “due” for an earthquake – how agents can prepare

Parts of Canada face a significant risk of earthquakes, and fracking isn't helping. Are insurers ready?

Risk Management News

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Canada hasn’t had a megathrust earthquake since the year 1700, and researchers at Royal Roads University who study coastal sediments found that the country is “due” for one – if not in this generation’s lifetime, than in a timeframe when modern infrastructure and society will be impacted.
 
Despite this, in two of the nation’s most earthquake-prone regions, policyholders who would be protected in the event of a disaster remain rare. 
 
According to the Insurance Bureau of Canada (IBC), 55% of British Columbians and 96% of Quebecers have no earthquake coverage whatsoever. This is particularly startling considering that fracking is causing a surge in earthquake phenomena, such as the record-breaking 4.4 magnitude quake that hit Fox Creek, Alberta in December.
 
The bureau also notes that Canada is the only nation in the Pacific “Ring of Fire” that hasn’t experienced a major earthquake in recent years.
 
These facts caused IBC to commission a study that forecasted earthquake scenarios and their implications on the insurance industry.  In one, a 9.0 magnitude earthquake strikes the coast of Vancouver Island and causes landslides and a tidal wave.  In this instance, only $20 billion would be insured out of $75 billion in total losses.
 
The other scenario is equally grim.  In that, a 7.1 magnitude quake underneath the St. Lawrence River would cause a financial impact of $61 billion, only $12 billion of which is insured.
 
“Canada faces a major risk for which we are clearly not prepared,” Don Forgeron, CEO of the IBC, told The Globe and Mail. “Inaction is not an option.”
 
Many Canadians remain unprepared simply because they are unaware that they don’t have coverage in the first place. 
 
56% of Canadians believe that the government would provide financial aid in the wake of a natural disaster, according to a survey conducted by Square One.  Since Canadians can obtain insurance for this type of natural catastrophe, though, residents are not eligible to collect assistance from government services
 
As a result, the onus lies on agents to educate clients on what coverages exist, whether as a separate policy or as a supplement to homeowners insurance.
 
“There are some misconceptions that need to be addressed,” said Daniel Mirkovic, president of Square One
 
 

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