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Tuesday, 31 January 2017

How to Assess Terrorism Risk Quantitatively and Qualitatively

Article written by: Virág Fórizs, Analyst at Verisk Maplecroft & Jonny Green, Risk Consultant at AIR Worldwide

(AIR Worldwide is a Silver Sponsor of C4 2017)

With so many terrorist attacks around the globe there may be a perception that the risk of terrorism is increasing. Whether this is the case or not is a hotly debated topic, but as the Head of Global Crisis Management at Allianz Global Corporate & Specialty mentioned to the Wall Street Journal last year, the nature of terrorism insurance is changing, even if the threat isn’t.

These changes in perceived risk and associated loss can be difficult to account for when considering new business. A combination of qualitative reporting and quantitative analysis is needed to provide insight into the multi-faceted nature of terrorism risk.

Qualitative reporting can give a national level assessment of terrorism risk by monitoring three characteristics:

  • An overview of the intensity and threat of known terrorist groups
  • The impact of historical events, and
  • Counter-terrorism capabilities including security forces and policies

The overall view of risk can be enhanced through quantitative means by considering the current level of exposure in an area through accumulation analyses and a realistic view of losses via deterministic scenarios. This blog discusses both qualitative and quantitative means of terrorism risk management using solutions from Verisk Maplecroft and AIR Worldwide. 

Identifying and understanding terrorism risks

Databases containing details of historical terrorist incidents and risk indices derived from those incidents are vital to understanding the evolving nature of terrorism risk to insured assets. However, it is also crucial to have an assessment of the current level of terrorist threat and a view of security forces’ ability to conduct counterterrorism.

Verisk Maplecroft’s Terrorism Incident Database, combined with its suite of quarterly-updated terrorism indices, provides underwriters with analytics to understand the current threat to an insured asset and how that threat evolves over time.

The indices cover 198 countries worldwide at national and subnational levels. The Terrorism Database contains more than 130,000 incidents from 2004 to the present day. Each incident record contains a narrative alongside up to 20 individual data points, including weapon types, perpetrator groups, casualty profiles, details of damage to physical assets, and the most precise geo-tag possible.

The Terrorism Intensity Index has been calculated at the subnational level down to 1km2 resolution. Combining geo-tags for each terrorist incident with data from the Terrorism Intensity and History of Terrorism Indices, underwriters can instantly quantify terrorism intensity on a 0–10 scale for any location worldwide.

In addition, Verisk Maplecroft’s Access an Analyst service taps the combined knowledge political risk experts in more than 40 countries to offer qualitative assessments of the security risks posed to a particular region.

Terrorism Risk Management Solutions

Once an understanding of the terrorism situation has been gained, analyses using AIR's Touchstone® platform can be used to add a financial value. For risks located outside of the U.S three methods can be combined to give a comprehensive insight into terrorism risk; these can be done at the individual account or portfolio level. 

1) Ring based analyses - Identifying the point of Maximum Exposure

The point of maximum exposure within a portfolio can be identified using ring based analyses, and its exposed limit can be calculated for given radii. The Dynamic Ring Analysis functionality in Touchstone—as explained in this video—allows users to find the point at which a ring of a given size covers the maximum exposure concentration in their portfolios, pinpointing the area most vulnerable to a single terrorism event. Locations with high exposure concentrations can be cross-referenced with the risk profile developed by Verisk Maplecroft to ensure that a portfolio is not overly-exposed to high risk sections of a country.

2) Accumulation using Verisk Maplecroft’s Terrorism Intensity Index

These metrics can be used to compare the relative terrorism risk between accounts/portfolios. A real strength of Verisk Maplecroft is the risk indices across different themes. When considering the threat of terrorism these indices are developed further to produce a subnational Terrorism risk map that details the risk index to 1km2 resolution (Figure 1).

Figure 1: The Subnational Terrorism Intensity Index map displayed using Maplecroft’s Global Alerts Dashboard. Individual events are also recorded and displayed here.
AIR has taken this subnational map and created a hazard layer for use within the Geospatial Module of Touchstone. This allows a user to analyse their exposure and identify exposed limits by risk band, enabling portfolios or accounts to be managed so terrorism risk is spread to prevent a concentration of exposure in a high risk area or inform a risk-based selection of contracts.

Another accumulation method, little used due to lack of available data, can still give insights into what would happen if historic attacks occurred today. Instead of being ring based this method uses accumulation of exposure within historical blast footprints, such as the 1993 Bishopsgate bombing in London. With improved data processing technology, historical images can be geo-tagged and used to create footprints on which to accumulate; such work has been done by some organisations where information is available (Figure 2).

Figure 2: Shapefile produced of documented damage from the 1993 Bishopsgate bombing and imported into Touchstone® for use in accumulating exposure. (Source: AIR and IMSL)
3) Deterministic Loss Analysis

The third method is to calculate the potential loss if an attack were to actually occur. With Touchstone 4.0 (released June 2016) AIR provided the opportunity to run deterministic loss analyses for terrorism in 27 countries across the globe (Figure 3). Deterministic analysis estimates losses (not exposed limits) from a blast of a defined tonnage of TNT centred at a specified location. These analyses use continuous, physics-based blast attenuation functions and engineering expertise to estimate damage and loss within physically realistic footprints. Three primary pieces of information are used in the deterministic analysis: the urban density of the region where the blast is simulated, the tonnage of the weapon being used, and the vulnerability of the structure to overpressure.
Figure 3: The user interface for creating terrorism events in 27 countries worldwide is intuitive with point and click functionality. The image shows approximately 4,000 events already created with the option to manually import a conventional or CBRN event in the U.S. (Source: AIR)
Using an Urban Density Index for these 27 countries, the severity of damage to a property from a variety of different devices ranging from a portable rucksack bomb to a large truck bomb similar to that used in the Bishopsgate bombing can be simulated. The functions defining the vulnerability of structures to a blast have been developed in the same way that vulnerability functions exist for other hazards. They have been tuned using historical data and incorporate research by organisations such as the Department of Defence.

The reports and focussed insights provided by Verisk Maplecroft allow risk professionals to understand the terrorism threat to their exposure on a regional and sub-regional basis. These insights can then be enhanced using Touchstone to consider the potential financial exposure within a threat band and to identify the point of maximum exposure within a ring. This financial view of the risk can be refined by using AIR’s Terrorism Model to consider estimated losses if a potential attack were to occur. Using a combination of the insights obtained through Verisk Maplecroft and Touchstone a comprehensive view of the risk of terrorism can be quickly and easily achieved.

This blog post has been supplied by AIR Worldwide. 

Charlene Chia, Senior Risk Consultant, AIR Worldwide is a panelist at CatIQ’s Canadian Catastrophe Conference (C4 2017) on the Terrorism Risk session during the conference.

Monday, 30 January 2017

WHY WAIT FOR 911? - Private Firefighting

Article written by: Kristopher Liivam, Canadian Registered Safety Professional & 
President, Arctic Fire Safety Services Limited

(Arctic Fire Safety is a Silver Sponsor of C4 2017)

When a wildland urban interface (WUI) fire occurs, it can easily overwhelm local emergency services, as was witnessed in Fort McMurray.  It is not because a wall of fire consumes everything in sight, as the radiant heat from even the largest of wildfires will damage but not consume a property if there are no fuel sources within 20 meters of the structure. The preliminary summary from the Institute of Catastrophic Loss Reduction on the Fort McMurray fire indicated that 85% of the homes which were lost were from fire brands (flaming branches, pine cones, and ground debris) which were thrown ahead of the fire, which could be as far as 2 kilometres.   This is important to understand when discussing how to protect your clients and your company from wildfire claims and how private fire fighting companies can assist.

If you look into the history of private fire fighting and insurance, the relationship goes back hundreds of years. The origins of organised fire protection and fire insurance can be traced back to the days of the Roman Empire. In modern history, companies such as AIG and Chubb either run their own fire brigades or sub contract them out to protect their clients' assets. The reason for this is not purely benevolent, as there is a strong business case to prevent total loss claims from wildfire. If you take a single home claim, you are looking at  hundreds of thousands of dollars, or even into the millions when adding up the content loss and living out allowances. These claims go up in a WUI because, due to the reasons mentioned above, dozens or even hundreds of homes are threatened all at once. As you will hear during the CatIq C4, the propensity of WUI in Canada is going to increase due to climate change and ongoing development in heavily forested areas. 

The cost to operate or contract out a small wildfire response team for the fire season would be about the same cost as 1 total home loss due to wildfire.  The benefit of having your own wildfire team is that when they are not being utilised for fire fighting they can be used to assess and educate your policy owners in Fire Smart within communities most susceptible to wildfire threats, with the goal of preventing a claim to begin. Municipalities simply do not have the resources to go out and evaluate every home and coach their residence on how to make their homes more resilient, so why not have an experienced fire fighter evaluate and coach your clients' for you? 

Should a wildfire threaten the community, the insurer could deploy that wildfire response team to protect the policies which would have the largest potential claims with indirect or direct attack methods. By using software, such as Red Zone, your valuations can be entered and prioritised to ensure the properties you want protected are. After all, if you called the municipality's fire chief or incident commander during a WUI and told them to protect a particular home because it would cost you millions of dollars in claims... you would probably hear a few choice words then a click!  So, "Why Wait for 911?" when you can ensure your clients' assets and your bottom line are protected?

Consider Arctic Fire Safety Services if you are looking for:

Please feel free to come chat during the conference or give me a call to discuss which options are best for you!

Kristopher Liivam, Canadian Registered Safety Professional
Arctic Fire Safety Services Limited
55 Luxstone Point SW
Airdrie, AB T4B 0H7

"Why wait for 911?" 

Friday, 20 January 2017

Earthquake Risk in Canada: What Is ‘The Big One’?

(Maiclaire Bolton, Seismologist and Sr. Product Manager, CoreLogic)

Across Canada, when thinking about earthquake risk, many commonly refer to ‘The Big One’ that will eventually strike British Columbia (B.C.). But what exactly is the definition of ‘The Big One’? Understanding the different types of earthquakes that can occur, the unique hazards they pose, and the probability that one of them will occur, all help to define ‘The Big One’.  But it’s not just about B.C., as there are also areas of eastern Canada that are prone to earthquakes, so a significant earthquake in this region could also gain the title—and related concern—of the ‘The Big One’.

The Geological Survey of Canada locates approximately 4,000 earthquakes across the country each year.1 Most of these earthquakes are too small to cause damage, but several events are still felt each year. In addition, every few decades, a damaging earthquake impacting Canada does in fact occur, and historically, on average, every few centuries, the country experiences one of the largest earthquakes in the world as well.

Figure 1 shows earthquake activity across Canada and illustrates that nearly every province and territory has some degree of earthquake hazard. Most notably, however, the highest level of earthquake activity and resulting seismic hazard lies in B.C. where the largest and most frequent earthquakes occur. There also is an active earthquake zone in eastern Canada along the St. Lawrence River Valley and across the territories in Canada’s arctic region.

The areas of high seismic activity, and correspondingly high seismic hazard that also intersect with highly populated urban centres, are the areas of greatest concern to earthquake risk managers. They also happen to be areas populated with numerous residential, commercial and industrial properties. With this in mind, the key areas of earthquake risk in Canada are southwestern B.C. and the southern regions of Ontario and Quebec, extending from the Ottawa Valley up the St. Lawrence River.

Figure 1. Map of earthquakes with magnitude ≥3.0 in or near Canada (1627−2014)2

Source: Courtesy of Natural Resources Canada, 2016.

British Columbia

Just off the west coast of Vancouver Island lies the Cascadia subduction zone where the oceanic Juan de Fuca plate is descending, or subducting, beneath the continental North America plate. Three different types of earthquakes occur in this subduction zone environment: shallow crustal earthquakes in the overriding North America plate, deep intraslab earthquakes in the subducting Juan de Fuca plate, and very large megathrust earthquakes along the shallow interface boundary of these two plates.

Shallow crustal earthquakes can be devastating, especially if located near an urban centre. At shallow depths (less than 30 km), the ground motions are very close to the surface, and the high-frequency of shaking associated with these events can cause significant damage, especially if shaking continues for long durations. The 1946 magnitude 7.3 earthquake on Vancouver Island was the most recent large, damaging shallow crustal earthquake in southwestern B.C. Seismologists believe that in this region, shallow crustal earthquakes can reach magnitude of approximately 7.5.

Deep, intraslab earthquakes occur within the subducting Juan de Fuca plate as it descends eastward beneath the continent of North America, most commonly located beneath the Strait of Georgia and south into Puget Sound, WA. They are important because of their relatively high recurrence frequency. The most recent damaging intraslab event was the 2001, magnitude 6.8 Nisqually earthquake that occurred south of Olympia, WA. From a Canadian perspective, this event was widely felt and caused minor damage across southwestern B.C.3 These earthquakes commonly occur at depths between 50 and 80 km, but can extend down to depths of 100 km / 62 mi. Earthquakes at these depths generally cause less severe damage locally, but the resulting geographic footprint of distributed lower damage will be larger than a shallow earthquake of the same magnitude.

Historically, the Cascadia subduction zone has produced some of the largest earthquakes the world has experienced. This megathrust fault, along the plate boundary interface, extends from Brooks Peninsula on Vancouver Island to Cape Mendocino in northern California, where it terminates at the San Andreas fault. Seismologists have determined that great megathrust earthquakes have occurred on an average of every 500 years.4 The most recent of these events occurred on January 26, 1700 and was a magnitude 9 event. The Cascadia subduction zone has an off-shore location, so the fault rupture and greatest shaking will occur away from urban areas. Nevertheless, megathrust earthquakes with several minutes of shaking are rich in long-period (low-frequency) energy, and this type of ground motion can still be damaging to tall structures several hundred kilometers away, as observed in the 2010 magnitude 8.8 Maule, Chile and 2011 magnitude 9 Tohoku-oki Japan subduction earthquakes.

Further to the north, the Queen Charlotte fault poses a unique hazard in northern B.C. While the population exposed to this hazard is far lower, it is still present.  The largest earthquake instrumentally recorded in Canada was a magnitude 8.1 in 1949 along the Queen Charlotte fault. Damage was observed 200 km away in Prince Rupert, B.C., and the earthquake was felt as far away as Vancouver and Victoria, approximately 800 km away. More recently, a magnitude 7.7 earthquake occurred in October 2012 just to the south of the Queen Charlotte fault. While not a significantly damaging earthquake, it has been scientifically interesting for the research community and serves as a reminder that large earthquakes do occur in Canada.

Eastern Canada

Eastern Canada is located in a stable continental region, and the level of earthquake activity is much less frequent than along the west coast. However, the region has experienced large, damaging earthquakes in the past and will again in the future. The largest known earthquake in eastern Canada was the 1663 Charlevoix earthquake, which has been estimated to have a magnitude between 7.3 and 7.9.5 More recently, the June 2010 (magnitude 5.4), May 2013 (magnitude 5.2) and the 1988 magnitude 5.9 Saguenay earthquakes all serve as a reminder that eastern Canada is seismically active. Seismic activity in stable continental regions is generally related to the regional compressive stress field, where earthquakes most commonly occur in the areas of inherited crustal weakness that formed in ancient tectonic episodes.

Even though eastern Canada exhibits lower rates of earthquake activity, the underlying soil and rock conditions in a stable continental region are very different than in western Canada. As a result, seismic waves travel greater distances without losing their energy. As such, the ground-shaking footprints from earthquakes in eastern Canada are much larger than earthquakes in western Canada, leading to a potentially larger impacted area.

Damage Potential of ‘The Big One’
The earthquake risk in Canada is real and must be adequately prepared for, but what exactly is ‘The Big One’ in Canada? There has always been a significant amount of attention on the Cascadia subduction earthquake, but is this earthquake really ‘The Big One’? If one only considers its magnitude, yes, but will it absolutely be the most damaging event Canada will see? Likely not. Utilizing the CoreLogic® Canada Earthquake Model, and taking into consideration both the severity and frequency of potential events, estimated damage to insurable assets of Canadian exposure could be estimated at approximately $20 billion (CAD) for a magnitude 9 Cascadia megathrust event—a fraction of the total losses across the entire impacted region.

Comparatively, a shallow crustal earthquake directly beneath a major urban centre like Vancouver or Montreal, could be catastrophically worse. Modeled estimates indicate that a magnitude 6.9 earthquake located 10 km southwest of downtown Vancouver, could produce from $15 to $25 billion (CAD) in ground-up damage to insured assets. This scenario would have an impact on the national Gross Domestic Product (GDP) of 1 to 1.5 percent, similar to the impact Hurricane Katrina had on the U.S. in 2005. Furthermore, in eastern Canada, a magnitude 6 earthquake with an epicentre 15 km to the northeast of downtown Montreal, could cause $35 to $50 billion dollars in ground-up damage to insurable assets. This would have a larger impact of 2 to 3 percent of the national GDP, along the same lines as the impact of the Tohoku-oki earthquake on the Japanese economy. With a slightly larger magnitude and closer epicentre to the downtown city core in either example, these losses could be double or more, depending on the magnitude and precise location. Compared to the devastating impact of the 2011 Christchurch earthquake, which was approximately 13 percent of New Zealand’s national GDP, the two Canadian examples seem much more manageable, but it is important to consider that even though they are infrequent, low-probability events, they are not the worst-case scenarios.

These examples would also be very rare events, but so was a direct hit on the city of Christchurch, New Zealand. It is rare, but it can happen, and it is important for the industry to be aware of the potential risk. The reality is that the definition of ‘The Big One’ is relevant to one’s own perspective. Risk managers must determine what they are evaluating in terms of their own risk to adequately understand how they will be impacted. For the country of Canada, extreme catastrophic events near major urban centres, really are ‘The Big One’s to be considered.

It is not a matter of if, but when a damaging earthquake will happen in Canada. While it could be several days or several hundreds of years until the next Cascadia subduction zone earthquake ruptures, a significantly damaging earthquake could occur in Canada at any time, so it is best to be prepared.


2.       Halchuk, S, Allen, TI, Rogers, GC, Adams, J (2015): Seismic Hazard Earthquake Epicentre File (SHEEF2010) used in the Fifth Generation Seismic Hazard Maps of Canada, in, Geological Survey of Canada, Open File 7724, pp. 16, doi: 10.4095/296908.
3.       Molnar, S., J. F. Cassidy, and S. E. Dosso, 2004. Comparing intensity variation of the 2001 Nisqually earthquake to geology in Victoria, British Columbia, Bulletin of the Seismological Society of America, 94, 2229-2238.
  1. Ebel, J. E. (June 2011), "A New Analysis of the Magnitude of the February 1663 Earthquake at Charlevoix, Quebec" (PDF), Bulletin of the Seismological Society of America, Seismological Society of America, 101 (3): 1024–1038.

© 2016 CoreLogic, Inc. All rights reserved.
CORELOGIC and the CoreLogic logo are trademarks of CoreLogic, Inc. and/or its subsidiaries.
All other trademarks are the property of their respective holders.

This blog post has been written by Maiclaire Bolton of CoreLogic.

Tom Larsen, Hazard Product Architect, CoreLogic will be a panelist at CatIQ’s Canadian Catastrophe Conference (C4 2017) on the CAT Models - Model & Hazard Uncertainty session during the conference.

Monday, 16 January 2017

George Kourounis - Keynote Speaker at CatIQ's Canadian Catastrophe Conference

(George Kourounis, Storm Chaser, Adventurer, Host of Angry Planet)

I have a rather unique job that I never thought was possible when I was a kid, trying to figure out what I wanted to do with my life. As a matter of fact, my “job” never even existed as a career path until I carved out the niche for myself as I got older, and it has been a wild ride.

As a professional explorer, storm chaser & TV presenter, it’s my job to travel the world and document the most extreme places, with the intent of sharing what I’ve seen with as many people as possible. What started out as a hobby that combined photography and storm chasing, has slowly grown to the point where I’ve hosted several television programs, led an expedition for National Geographic that was deemed “impossible,” addressed the United Nations Environmental Emergencies Forum, and traveled to over 60 countries on all seven continents.

A large part of what I do is filming from the middle of natural disasters which include: hurricanes making landfall such as Katrina and Sandy, tornadoes ripping through the heartland of the Great Plains, even lava flows steamrolling through towns off the coast of Africa. As you might imagine, it can get dramatic and exciting at times. While that is true, the vast majority of my time is spent planning, preparing, getting from point A to point B, and editing imagery after the fact. The actual exciting parts are brief and fleeting, but in the end are completely worth the effort. Despite a passion for witnessing Mother Nature’s wrath up close, I never wish for these events to impact people’s lives. The act of me being there to document them won’t affect whether or not they happen, but at least I can show the world the scope and scale of what our dynamic, ever changing world is capable of, and hopefully some will take notice and evacuate, or at least be more prepared the next time disaster strikes.

What a lot of people don’t seem to realize is that these “disasters” are merely nature trying to return to a state of equilibrium, whether it’s a balance of atmospheric pressure, or tectonic stresses. These are not intrinsically disasters, but merely natural phenomena. They only become natural disasters when they affect human populations. A violent hurricane that’s spinning away out at sea, posing no threat to anyone is hardly a disaster… Put a city in the path of that same hurricane, and now we have the makings of a monumental catastrophe.

It is us humans that are the defining factor in what constitutes a disaster…. And there sure are a lot of us here on planet Earth. With over 7 billion and counting, it’s becoming harder and harder for these phenomena to avoid becoming disasters.

Of course, we are getting better at coping with and predicting them. Severe weather warnings are getting better. Satellite imagery, including the recently launched GOES-R weather satellite are poised to take our understanding of the planet to the next level, and of course disaster mitigation and response systems are better now than ever before, and building codes & construction techniques get upgraded regularly. Also, we’re now seeing the details of what’s going on during disasters in real time via a never-ending stream of pictures and online videos, filmed with the ubiquitous smart phones in the hands of people who probably should have evacuated… Which accounts for why most of them are shaky, out of focus and annoyingly filmed vertically (A personal pet peeve of mine… If you are going to ignore the warnings and catch that epic, cell phone video clip of your neighbour’s house being shredded in a windstorm, at least hold your phone sideways. TV sets and computer monitors are horizontal, our eyes are horizontal!…*end rant*)

Regardless of the quality of the photos and videos being put online, there is no denying that social media has taken on a huge role in the way we act and react during emergencies. Twitter and Facebook have become important tools in lifesaving, search & rescue, and disseminating lifesaving instructions from regional authorities. Hashtags such as #ONstorm are monitored by Environment Canada, The Weather Network and news outlets to help spread the word about severe weather impacts across Ontario, and other provinces.

The power of instantly being able to upload photos and video to the worldwide stage of social media was seen in full force during the forest fire emergency at Fort McMurray this past spring. Apocalyptic looking cell phone videos of desperate people attempting to flee the inferno spread across the globe faster than the fire itself spread into town. In a matter of minutes, the scene in northern Alberta became a worldwide, viral topic on the internet and traditional media as well. Nobody cared if the video was shaky, handheld or drifted in and out of focus. What we all remember seeing was the views from inside the cars of people trying to make it out of town on the only road south out of Fort McMurray, their cars surrounded by a wall of flames. The dramatic visuals, coupled with the emotional impact of imagining ourselves in the same situation made for such compelling personal stories that the nation, and indeed much of the world watched on their TV’s, tablets, and phones to see what the city’s fate would eventually be.

I am equally concerned and excited about the future. We face many challenges moving forward, knowing that our climate in changing in ways that are difficult to predict. The number of extreme weather events such as droughts and floods are expected to increase as global weather patterns shift. Which, coupled with increasing global populations and urban sprawl, set the scene for possible widespread humanitarian disaster in the years and decades to come. The good news is that we are armed with progressively better technology, knowledge and data that can allow us to make better predictions, forecasts, and long-term modelling to ensure that fewer of these phenomena become disasters.

I’m looking forward to addressing the conference members during my keynote talk in February where I’ll be sharing my most intense, most frightening, and unusual adventure (and misadventures) with nature’s extremes from across all of Canada and the world. I’ll see you there!

This blog post has been written by George Kourounis who is a Keynote Speaker at CatIQ’s Canadian Catastrophe Conference (C4 2017).

Friday, 13 January 2017

Earthquakes in Eastern Canada – Really?

(Dr. Balz Grollimund, Head Treaty Underwriting, Swiss Reinsurance Company)

Let's face it, the past few years of earthquake activity haven't been flattering for earthquake specialists around the world. The three biggest earthquake-related insurance losses ever all occurred in areas we did not expect them. In Japan, experts were expecting the next "big one" on a large fault off the Honshu coastline to the west of Tokyo. Yet, the big 2011 earthquake, which also caused the devastating Tsunami, occurred to the northeast of Tokyo on a fault which was not expected to create any earthquakes close to the size that was seen in 2011. In New Zealand, all eyes have been on Wellington, the city everybody agreed was at highest risk for an earthquake. Yet, the devastating 2010/2011 earthquake sequence hit somewhere else, on previously unknown faults near Christchurch. Going back further, even the 1994 Northridge earthquake in California occurred on a previously unknown fault.

Being an earthquake specialist myself, this makes me pause and think about how we can improve going forward. Clearly, we should continue efforts to improve understanding of earthquake risk around the world, and to put special focus on cities thought to be in high earthquake risk areas. But we also have to recognize that there is much we don't yet understand about when and where earthquakes will happen going forward. The next "big one" just might again hit cities which currently don't get much attention.

But what does all of this have to do with Canada? Well, similar to Japan and New Zealand prior to the recent events, Canada has a clear focus on earthquake hazard in British Columbia, especially the cities of Victoria and the larger Vancouver area. Having visited the area a few months ago, I was amazed at the level of earthquake awareness: authorities are working on emergency management plans, key infrastructure is being evaluated for earthquake safety and measures are underway to retrofit or replace inadequate structures. And about half of all homeowners purchase earthquake insurance, which will help to pay for reconstruction following an event. Eastern Canada on the other hand is not typically associated with earthquake risk. As a result, the region is less prepared. Building codes for new construction are less stringent than in western Canada, historic masonry buildings – known to be very damage-prone during earthquakes – are prevalent, and only a small fraction of homeowners purchase earthquake insurance.  This would leave individuals and local and federal government on the hook for repairs.

And earthquakes in eastern Canada are not something we can afford to ignore. Most prominently, the Charlevoix region in northeastern Quebec has had several damaging earthquakes of sizeable magnitude. The most recent sizeable event occurred in 1925, with a magnitude of 6.2 in the area of Charlevoix-Kamouraska along the Saint Lawrence River roughly 100km northeast of Quebec City. The event caused extensive damage in the towns of the epicentral area and some damage was also observed in Quebec City. A much larger event of estimated magnitude 7 or larger struck the same area in 1663. According to an AIR study commissioned by the Insurance Bureau of Canada, the total loss for an event similar to the 1663 earthquake would cause a total property loss of CAD 47.3bn of which only 26%, or CAD 12.23bn would be insured. For residential properties, only CAD 0.6bn or 2.8% of the total damage of CAD 19.6bn would be picked up by insurance. Therefore, residential property owners would have to come up with a staggering sum of CAD 19bn to pay for reconstruction or hope for the government to help out. 

From other regions around the world, we've seen that the resilience of communities to natural catastrophes is strongly driven by the financial ability of property owners to rebuild. In Italy for instance, where equally few residential property owners purchase earthquake insurance, cities and towns affected by earthquakes in the past remain to be fully rebuilt. After an earthquake hit southern Italy near Naples in 1980, some survivors had to wait for more than 20 years before their damaged properties were restored by the government. The downtown area of L'Aquila, which was hit by an earthquake in 2009, largely remains to be rebuilt seven years on. Contrast that with Christchurch New Zealand: Even though the people of Christchurch went through hard times in the aftermath of the series of earthquakes affecting their city in 2010/2011, they didn't have to worry about the financial burden. Insurance companies are paying for USD 22.2bn out of the total event damage of USD 26.6bn, so reconstruction can start as soon as building permits are available.

Taking all this together, there is a clear case to take steps to ensure that more property owners protect themselves against earthquakes, not just in British Columbia but also in other parts of Canada and especially in Quebec. As with many things, a first step towards action is awareness. We have to ask ourselves, what can we do to raise the awareness of the Canadian population to the potential hazard of earthquakes and the impact they can have? Only if we can find answers to this question will it be possible to lead Canadian communities toward improved earthquake resilience. Encouragingly, examples from around the world, including British Columbia, show that it can be done.
We'd love to hear your thoughts on ways we can all take steps to better prepare ourselves against this unpredictable peril.

This blog post has been written by Dr. Balz Grollimund, Head Treaty Underwriting at Swiss Reinsurance Company

Dr. Balz Grollimund is a panelist at CatIQ’s Canadian Catastrophe Conference (C4 2017) on the Geomagnetic Storms - The Next Black Swan session during the conference.