May 3, 2017 by Sarah Cunningham-Scharf
On Monday, Canadians in the Yukon and northwestern B.C. felt the tremblings of a 6.2-magnitude earthquake; two industry experts say the experience is a strong reminder of the importance of owning earthquake insurance.
“For individuals who are out in B.C. and the Yukon, it’s going to make them much more aware of the likelihood of an event like that happening within their lifetime . It’s going to be a dose of reality for some people in the fact that earthquakes are real and we’re exposed to them and it could have an impact on things going forward,” says Paul Sweetnam, director of commercial insurance, Pacific Region, at RSA.
This is a much needed wake up call for some western Canadians, says Aaron Sutherland, vice-president, Pacific area, at the Insurance Bureau of Canada, as cost isn’t the main factor hindering the penetration of earthquake insurance. “We’ve done our own polling, and the biggest barrier we see is that people understand earthquakes are real, but they don’t see it as a risk.”
After Monday’s quake, brokers can take the opportunity to have the conversation with clients about protecting themselves from earthquake loss. Sweetnam says, “I think for people who might have ignored it before, they might be a bit more willing to have that conversation with their brokers. And because brokers understand the impact of it potentially for the client, I think [it’s important to be] very proactive in having those conversations about recommending that coverage.”
Sutherland mentions this is especially true for clients in areas with ballooning home prices, like the Greater Vancouver Area. “With the prices of homes in Vancouver, we don’t have a lot of extra cash. If you had to rebuild after an earthquake it would be basically impossible.”
The good news is that many Canadians in higher-risk areas are already purchasing earthquake insurance, he continued. “It’s up around 60% in Vancouver, and around 70% on Vancouver Island.”
To broach that conversation with a reluctant client, Sweetnam suggests, “I think it comes down to people evaluating independently or in conjunction with a broker what their exposure is and what their comfort is with taking on that risk, and an educated decision is made from that.”
Sutherland says, “That’s the important part, is that we at the IBC and brokers are informing Canadians about the importance of earthquake insurance and that it’s not part of a regular home insurance policy. It’s additional. We need to do our part and inform people to make sure people understand the risks and the benefits of being insured.”
This story was originally published by Canadian Insurance Top Broker.