COVER STORY
Split Personality
“Better building codes at the provincial and municipal levels, and a viable framework for sharing financial risk at the federal level, are needed,” says Don Forgeron of Insurance Bureau of Canada. “In order to facilitate putting such an arrangement into place, a minimum of uniformity in the insurance industry earthquake product offer is desirable.” Harvey’s take is “insurance rates should reflect potential damage loss, which could be more than 100% replacement value for a (barely) code-compliant building, and little or no loss for an immediate post-seismic occupancy building.” Adds Lamontagne, “When everyone starts believing it is a real risk, then they will start preparing.”
34 Canadian Underwriter March 2017
LOOKING FORWARD “Whether it’s in the east or west, a significant over-modelled quake will have a significant negative effect on Canadian insurers, and the Canadian economy as a whole,” Wassenberg says. For a supercatastrophic quake, one beyond a 1-500 year event, “there is a growing awareness that Canada may be unprepared,” he says. “While the insurance industry can, and will, do its part, there is a need to formalize the role government can play in helping to manage the financial and
economic impact of a super-catastrophe.” Addressing gaps in public policy and consumer protection “can only be possible if industry and government work together on earthquake preparedness. A strong capitalization regime on its own is not sufficient,” argues Forgeron. “Better building codes at the provincial and municipal levels, and a viable framework for sharing financial risk at the federal level, are needed,” he says, which “mirrors what most other earthquake-prone jurisdictions have already done.”