It Can Happen Here

Someone took eerie cell phone footage of the Magnitude 6.3 earthquake that has killed at least 155 people so far in Christchurch, New Zealand.

Aired on network television in Canada, the footage showed a typical tourist shot of an intersection in Christchurch, presumably taken to get a feel of the city’s architecture. Then the quake hits, the cell phone wobbles, and briefly the daytime scene turns to black. The video clip gives viewers the impression the place had plunged from daytime into darkness.

Which, metaphorically speaking, it has.

The 6.3 quake is considered to be an aftershock of a bigger, Magnitude-7.1 earthquake that hit Christchurch in September 2010. But damage caused by the aftershock turned out to be more deadly for two reasons, the first being the characteristics of the aftershock quake – its epicenter was 39 kilometres closer to the downtown area, its depth was shallower and it hit in the afternoon, when the downtown was busiest. Secondly, the city’s infrastructure had already weakened as a result of the September 2010 quake.

Catastrophe modelers are still calculating potential insured damages, but so far initial estimates of insured losses range between $3 billion and $8 billion.

Experts are already drawing comparisons between what happened in New Zealand and what might be expected in the event of an earthquake hitting the area around Vancouver, B.C. in Canada. It seems every time an earthquake happens elsewhere in the world, we are always reminded of the exposure on Canada’s West Coast. In fact, in its August 2007 issue, Canadian Underwriter drew parallels between the social dislocation caused by Hurricane Katrina and what might be expected to happen if an earthquake were to hit the West Coast. The title of the piece, written by Vanessa Mariga, asks the obvious question: ‘Are We Ready?’

One might argue Canada’s West Coast is more prepared for an earthquake now than it was when that 2007 piece was written.

For example, the Institute for Catastrophic Loss Reduction (ICLR), a research body supported by Canada’s property and casualty insurance industry, notes The City of Vancouver has finally started to bury underground the electrical wiring currently supported by wooden poles in the downtown core area – wooden poles that would very easily get knocked over in the event of an earthquake, thus creating a electrical/fire hazard. ICLR identified the need to beef up infrastructures in a report sponsored by Lloyd’s Canada, Reducing the risk of earthquake damage in Canada: Lessons from Haiti and Chile.

In addition, in January 2011, the Insurance Bureau of Canada (IBC), an association representing the country’s home, building and auto insurers, announced their gold sponsorship of ShakeOut, the largest earthquake drill to take place in Canada. IBC said more than 400,000 people participated in this drill in homes, schools, businesses and government across the province.

These initiatives show a better awareness and preparedness for an earthquake hitting where the risk exposure is highest – the Greater Vancouver Area.

But what about other areas of Canada, where the risk is also great? Alas, earthquake preparedness still has a long way to go in major urban areas such as Ottawa, Montreal and Quebec City. In fact, a Magnitude-5.0 earthquake hit the Ottawa area in late 2010, causing $16 million in damage. This isn’t enough to qualify as a ‘catastrophe’ – in the insurance business, the threshold is $25 million – but it did highlight a thorough lack of preparedness for something bigger. Insurers note the take-up on earthquake insurance remains quite low in the Ottawa and Montreal areas. So when these densely-populated areas get hit by an earthquake, there won’t be a whole lot of insurance available to fix or replace homes, cars and businesses after a quake.

What happened in Christchurch is an absolute tragedy. No doubt, the hearts of everyone in the industry reach out to the people in need of rebuilding their lives. The current hardship suffered by people in Christchurch is a grim reminder that Eastern Canada needs to be far better prepared to protect itself against a similar threat here in Canada.