A new scientific study on the impact of a major earthquake in Canada, released in Ottawa Tuesday by Insurance Bureau of Canada (IBC), leaves no doubt that Canada is not prepared to handle a major earthquake, which could happen at any time, and that the economic impact would be significant.
IBC commissioned the study by catastrophe modeling firm AIR Worldwide, which models two earthquake events.
The western scenario shows the effect of a 9.0-magnitude earthquake off the west coast. Overall economic losses in that scenario total almost $75 billion.
The eastern scenario shows the effect of a 7.1-magnitude earthquake near Quebec City. In that scenario, overall economic losses total almost $61 billion. Although these two seismic zones cover only a small fraction of Canada by area, 40% of Canadians live within them.
“The risk of a major earthquake affects us all, not just those living in high-risk areas,” said Don Forgeron, IBC president and CEO. “Events of this magnitude have a domino effect on the Canadian economy triggered by property damage, supply chain interruption, loss of services, infrastructure failure and business interruption.”
“Insurers, governments and all Canadians have a responsibility to prepare,” said Forgeron. “If a mega-earthquake should strike in a densely populated area, insurance alone will not pay for all the damage. Governments and consumers have a role to play.”
“The good news is that positive action reduces the risks,” added Forgeron. “The study we released today tells us that mitigation — such as more resilient building and infrastructure — can further reduce economic losses by a third or more. That’s why we are calling for an integrated preparatory approach to the earthquake threat.”
IBC wants to work closely with governments, the financial services industry and non-government organizations to ensure that a national response framework is in place before such an earthquake hits.