Prime Minister Mark Carney’s second budget proposal would set aside up to $50 billion for a Canadian earthquake insurance facility to help manage catastrophic risks in a major earthquake scenario.
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Prime Minister Mark Carney’s second federal budget proposal would establish a “Canadian earthquake insurance facility” and set aside up to $50 billion to help protect Canadians against catastrophic earthquake risks.
The proposal was introduced alongside legislation tabled last Thursday, with the government aiming to provide the Canadian insurance sector emergency funding up to $50 billion.
The Insurance Bureau of Canada said Canada is the only G7 country with significant earthquake exposure without a government-backed mechanism to manage risks tied to major earthquake damage.
Insurance Bureau of Canada vice-president of federal affairs Liam McGuinty said the country’s insurance industry is prepared for most earthquake scenarios, but that an “extreme earthquake” could produce tens or hundreds of billions of dollars in economic losses and create pressure beyond insurers into “financial stability and an economic problem for Canada.”
The budget proposal is intended to strengthen preparedness for earthquakes on the Pacific Coast, where experts forecast a 30 per cent chance of a major earthquake over the next 50 years.
Edwin Nissen, a Canada Research Chair in Geophysics and a professor at the University of Victoria, said the proposal addresses a long-standing blind spot in public policy and improves financial resilience as governments plan for events that are “inevitable.”
Nissen said the biggest concern on the West Coast is likely natural earthquakes in the Cascadia subduction zone, which spans from northern California to the region under the Pacific Northwest.
He also pointed to the need for seismically resilient infrastructure, saying that facilities including the proposed Pacific Link Pipeline would cross the Fraser River Delta, an area susceptible to earthquake liquefaction that can cause ground to sink.
In Canada, earthquake insurance is currently optional, and people without coverage would have to seek relief through programs such as the Disaster Financial Assistance Arrangements or other options.
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