Why an earthquake might mean even bigger claims than expected for insurers

We all know that Canada is long overdue for “The Big One” but a new report indicates that things may be made worse by an inept government – time to make sure your clients have enough coverage

Why an earthquake might mean even bigger claims than expected for insurers

Insurance News

By Lyle Adriano

Although the federal government believes that it is ready to handle a major earthquake event, a report found that a certain city has fallen behind in terms of quake preparation.

“Pacific Quake ‘16” saw Canada take part in an international earthquake preparedness exercise in June 2016. The test gauged how effectively governments could respond to a magnitude 9.0 earthquake off the southwestern coast of British Columbia and Portland, Oregon. It was the US bureau, Federal Emergency Management Agency (FEMA), which created an imaginary scenario morning quake on June 7 that was followed by aftershocks and a tsunami.

According to an internal document from the Government Operations Centre of Public Safety Canada, Ottawa fared poorly during the exercise due to bad communication and sloppy protocols, as well as the lack of any plan in the event that the tremors cause a tsunami.

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“This effort is remarkably inadequate,” executive director of the Institute for Catastrophic Loss Reduction (ICLR) at the University of Western Ontario Paul Kovacs told CBC News, after the news outlet acquired the document through an Access to Information request. “Most of the information known about this hazard does not appear to have been used in this exercise.”

The cities of Vancouver and Victoria sustained considerable damage and 60% of the province’s population lost communications during the simulated disaster.

In response to the results of the test, a Federal Emergency Response Plan was created. The internal document, however, found that this plan, too, left much to be desired.

“Roles and responsibilities … are not clearly defined,” the report said of the plan. The report also noted that strategic planning for the proposal was “ad hoc” and described the process for accessing federal assistance as “not clear, which resulted in confusion, and created delays in response.” The staff’s reliance on email systems to disseminate information was also criticized, noting that such systems would be destroyed in the event of an actual catastrophe.

While Kovacs praised Public Safety for participating in the exercise, he stressed that the test should have been much tougher and included more publicly available research about the specific susceptibilities of Canada’s West Coast to earthquake damage instead of relying on data from the US.

“This exercise is not a rigorous evaluation,” Kovacs said. “The plan was inadequate — it didn’t do the job it was supposed to.”

 
Related stories:
Earthquakes are a “systemic financial problem” the government must address: Report
Canadian non-life insurance market ‘likely’ to recover in 2017 – Fitch
 

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