Quake Stakes

Canada is known to be prone to earthquakes, and yet survey results unveiled at a recent earthquake symposium in Vancouver hosted by the Insurance Bureau of Canada (IBC) make clear that Canadians are not ready for the big one.

The survey – combined with an IBC-commissioned earthquake impact study last year – show that Canada is headed for a catastrophe if decisive and immediate action is not taken to get ready for an earthquake. Furthermore, multi-stakeholder collaboration is critical to achieving readiness.

These were among the key lessons from the IBC symposium, which brought together 160 experts and thought leaders from business, academia, government and emergency management. “Each of us – within our own disciplines and areas of expertise – already understands what a major quake means,” Don Forgeron, IBC’s president and chief executive officer, told attendees

“Today is about connecting the dots and sharing that expertise with each other. That sharing, that conversation, is crucial to preparing Canada for the reality of a major earthquake in a densely populated area. We can only reduce that risk when we understand it in all its dimensions.”

THE LOOMING THREAT: 9.0 EQUALS $75 BILLION

In October 2013, IBC released the results of a significant study from AIR Worldwide, global experts in catastrophe modelling, calculating the impact of a 9.0-magnitude earthquake off the west coast of Canada and a 7.1-magnitude earthquake near Quebec City.

AIR Worldwide found that overall economic losses from the British Columbia scenario would total almost $75 billion and those from the Quebec scenario would total almost $61 billion. There would be a domino effect on the economy all across Canada triggered by property damage, supply chain interruption, loss of services, infrastructure failure and business interruption.

SURVEY RESULTS: OVER-CONFIDENT, UNDER-PREPARED

Against that backdrop, results of an IBC-commissioned telephone survey by Pollara this spring are concerning. More than 2,000 people took part in the survey, which has a margin of error of plus or minus 2.2%, 19 times out of 20.

So what exactly did polled residents in the high-risk zones of B.C. and Quebec say about their earthquake preparedness? In a nutshell, the main findings are as follows:

• people do not think an earthquake is going to happen soon;

• respondents think they are covered, but they are not; and

• those polled overestimate their physical and financial preparedness.

People do not think an earthquake is imminent

Seismologists warn an earthquake could strike anytime, but many residents in the high-risk, high-population zones are not buying it. In Quebec, an overwhelming majority of respondents think the risk of an earthquake is practically non-existent. In B.C., most residents do consider an earthquake to be a possibility, but for most, it is an event that is 50 years away.

This poses a challenge: it is hard to convince people to prepare for something they doubt will happen anytime soon.

This was confirmed by survey responses. Of the sizeable group of respondents who indicated that they would never consider buying earthquake insurance, almost half in B.C. and three-quarters in Quebec say the main reason is they do not think a quake is going to happen.

They overestimate their financial readiness

A lack of belief that an earthquake will happen is a major reason why people do not buy earthquake insurance. In fact, only 31% of all respondents report

having earthquake insurance. Despite this low take-up, two-thirds of B.C. and Quebec respondents say they feel very or somewhat confident that they would be financially prepared if an earthquake hit.

One reason for this, perhaps, is they mistakenly believe regular home insurance will cover them: 71% of respondents say they would rely on insurance to cover rebuilding and replacement costs. Again, this is despite more than two-thirds admitting that they do not have earthquake insurance.

Many respondents are counting on another source, with almost 40% reporting that they would rely on government financial assistance.

But with the destruction wrought by an earthquake, the enormous costs and the strain on the country’s resources, the reality is that governments may not be in a position to pick up the tab.

They overestimate their physical readiness

Beyond financial preparedness, respondents were asked about physical preparedness. Close to two-thirds of those polled in B.C. and 40% in Quebec say they would have a good or excellent idea of what to do should an earthquake hit.

Those percentages fell, however, when asked about specifics, such as planning, practising an evacuation, having an emergency kit and quake-proofing the home. In all, 38% of British Columbians report that they have an emergency kit and supplies at the ready, but for most of the specific measures, fewer than 10% had done them.

And more than 30% of respondents say they had done nothing at all; in Quebec, 60% had done nothing at all.

THE GOOD NEWS: THE NEXT GENERATION

There are, however, some silver linings to the earthquake readiness story. For instance, about a third of respondents admit that they have not done enough to prepare for an earthquake. This acknowledgement is good because it means they are ripe for earthquake education.

Looking at the demographics of this group – those who recognize their unpreparedness tend to be younger, less affluent and more likely to be renters. They are also more likely to believe that an earthquake will strike.

The younger generation represents a prime opportunity to move the needle on earthquake preparedness.

Another piece of good news concerns the growing amount of earthquake information available to people. In 2012, IBC did a similar survey and asked if there was enough information available about how to prepare for an earthquake. At that time, 61% of respondents in B.C. and 33% in Quebec replied “yes.”

The most recent survey shows those numbers are up. In B.C. the number went up 15%, and in Quebec, there was an increase of 20%. This means education messages are being heard.

MAINTAINING THE MOMENTUM

The insurance industry is good at advancing consumer awareness and has a long history of identifying emerging risks and leading the charge to address them. It is again taking the lead on the critical conversation about quake preparedness.

Progress is already being seen. For example, Steven Blaney, Canada’s public safety and emergency preparedness minister, told attendees of the earthquake symposium he is committed to partnering with the insurance industry and other stakeholders to prepare the country for a major earthquake.

This affirms the critical message that partnership is key. “No one industry can solve the problem in isolation. This is about finding the right solution for Canada. It’s about working together to find a solution that works for government, insurers and consumers,” Forgeron said at the symposium.