Earthquake risk model coming for Canada, no flood model yet

NICC 2013 – Catastrophe modelling firm AIR Worldwide will be launching an earthquake risk model for Canada next year, after it conducted a major analysis for a study commissioned by the Insurance Bureau of Canada.

In June 2014, the firm will be releasing its earthquake model for Canada, including risk in British Columbia and Eastern Canada, AIR’s senior vice president of consulting and client services, David Lalonde, told Canadian Underwriter during the National Insurance Conference of Canada in Gatineau, Que.

The model also includes a look at fire spread risk, and an updated tsunami model, just months after releasing a tsunami model for Japan, Lalonde said.

In addition, the offering includes an update liquefaction model, and an earthquake-triggered landslide model. The model also includes improved data resolution and uses the latest soil maps from the Canadian Geological Survey, according to AIR.

The firm also worked with the University of Toronto to understanding the evolution of building codes in the country, Lalonde noted.

“What’s unique about Canada is that the location of the population is along the border of the U.S.,” he said, meaning that events here can have an impact south of the border, and vice versa. That means a large event here could have a particular impact for companies writing business internationally and some reinsurance companies.

The move comes as IBC prepares to release the study it commissioned on earthquake risk in Canada (conducted by AIR), which it says is one of the biggest threats to the industry.

The study, to be released at the end of October, outlines the impact on the industry of a 9.0-magnitude event off the west coast of Canada, and a 7.1-magnitude quake near Quebec City.

AIR also plans to release updated winter storm, severe thunderstorm and tropical cyclone models for Canada in 2015.

However, flood modelling in the country isn’t yet in the works. The firm is working on a model for the U.S., set to be released in 2014, but Lalonde said it will have to analyze where the demand for a similar model would be before launching a model for Canada.