VANCOUVER’S REAL EARTHQUAKE RISK: FIRE

The recent earthquake which shook residents of Seattle and Olympia in north Washington state has given risk managers with exposures in southwestern British Columbia more than a mild shudder. It has long been known that the highly urbanized cities of Victoria and Vancouver, plus the industrialized lowlands of southwestern B.C., face a high and unavoidable risk of a major earthquake. However, risk analysts point out that the potential damage resulting from an earthquake in a high-rise city like Vancouver will likely be dwarfed by a much greater hazard – follow-up fires. In fact, Vancouver offers the greatest risk of a fire breakout following an earthquake of all cities located along the west coast of North America, delegates at a recently held Institute for Catastrophic Loss Reduction (ICLR) conference were told.

Within the short span of the second half of February this year, residents of southwestern British Columbia felt the aftermath of two earthquakes measuring more than point six on the Richter scale. The first occurred on the Queen Charlotte Fault – which was responsible for the last major earthquake to have struck B.C. in 1949 – with the latest event having little loss impact. The second earthquake measuring 6.8 on the Richter scale originated 53 kilometers below the surface and about 50 kilometers away from Seattle, Washington. Tremors from what has since been dubbed the “Seattle Rattle” were felt as far north as Alaska, but did not result in any substantial damage to property in B.C. The earthquake did, however, cause an estimated $3 billion in losses (a third of which is believed to be insured) to the cities of Seattle and Olympia, according to the Insurance Information Institute (III).

Risk analysts believe that Seattle and Olympia got off lucky. The reason being is that the most recent earthquake exceeded the magnitude of the Northridge, California shaker which resulted in a US$25 billion loss, and thus far has been the costliest earthquake event for North American insurers. The reasons believed to have limited the extent of damage from the “Seattle Rattle” is the underground depth from where the shaker originated (surface earthquakes are considered to be far more deadly), plus the fact that many of the buildings in Seattle were built more recently and according to seismic building codes.

B.C.’s exposure

The lack of any real application of seismic building codes in Canada, combined with the high fire risk present in Vancouver, suggests that any major earthquake, similar to the one which struck the area in the year 1700 at a magnitude of 9.2 on the Richter scale, could result in property losses running over $40 billion and an untold number of deaths. And, according to research by Munich Re, the financial loss facing Vancouver based on a 6.5 earthquake occurring 10 kilometers below the surface of the city will be in the order of $32 billion, observes Anne Marie Sahagian, executive director of Emergency Preparedness Canada (EPC) and a representative of the new government response agency, the Office of Critical Infrastructure Protection and Emergency Preparedness (OCIPEP). “There’s nothing like a recent and close earthquake to focus our minds [on the risk facing southwestern B.C.],” she adds, while noting that the superior building codes applied in Seattle are recognized for having reduced the potential loss to that city.

Fire, however, remains the greatest threat to the city of Vancouver, says Charles Scawthorn, senior vice president of risk management agency EQE International. The agency was commissioned by the ICLR to conduct an analysis of potential property losses resulting from post-earthquake fires in the districts of Burnaby, Coquitlam, Delta, New Westminster, City of North Vancouver, District of North Vancouver, Port Coquitlam, Port Moody, Richmond, Surrey, Vancouver and West Vancouver. The areas in question account for 96% of the greater Vancouver regional district and approximately 1.7 million people. The total value of all infrastructure in the area amounts to about $270 billion, with “wood-based structures” accounting for around 65% of total building floor space, and 1,200 high-rise buildings in the region.

A great concern, Scawthorn observes, is that only about 20% of the high-rises are “sprinklered”, while very few have their own on-site firefighting water supply. In contrast, buildings located in high seismic areas in the U.S. are required to typically have a 15,000 gallon on-site water supply. Furthermore, he notes, “firefighting is dependent on two basic factors – availability of firefighting resources, and availability of adequate water supply for use by these resources”.

While firefighting equipment and manpower within the region appears to be adequate, Scawthorn points out that Vancouver and the southwestern region rely almost entirely on the Greater Vancouver Water District (GVWD) for their water. The GVWD has three main supply lines, two of which cross under the Burrard Inlet and pass over areas of soft soil which are at high risk of “liquefaction” whereby ground motion in an earthquake causes moisture in soft ground to rise and turns into a form of instant “quick sand”. The threat of these supply pipes breaking and thereby cutting off the water supply to Vancouver and the ability of the city to respond to fire outbreaks, is immense, he says. Scawthorn concedes, however, that Vancouver’s underground water network “Fire Protection System” which has separate water supply and high-powered hydrants is state-of-the-art. He does suggest that the network should be extended.

On a wry note, he points out that the region is serviced by five quick response firefighting boats, although none of these are positioned on the Frazer river. In that respect, he says the City of San Francisco recently acquired a firefighting boat that has water pump capacity exceeding that of all five of the firefighting boats in Vancouver – the boat in question was sold to the Americans by the Vancouver government. “It really is a nice boat, thank you,” Scawthorn adds tongue-in-cheek.

Another factor subjecting Vancouver to high risk of post-earthquake fires is the city’s decision to maintain overhead electric wiring. “Vancouver’s CBD [central business district] is an enormous concentration of value, yet it is the only major North American city with overhead electric transmission. Wood pole mounted transformers abound in the CBD, in many cases only inches from commercial buildings. In past earthquakes, pole mounted transformers arced and exploded. Because these were typically in residential areas, few ignitions occurred, but it is expected that many ignitions would result in Vancouver’s CBD due to these electrical sources. Undergrounding of the electrical transmission in the CBD would significantly reduce post-earthquake fires.”

Buildings & building codes

A study carried out by the department of civil engineering at the University of British Columbia on behalf of the B.C. government and the insurance industry suggests that the total loss of buildings in Vancouver as a result of a major earthquake to be around $2 billion – excluding property contents and damage caused by fire.

The study was conducted on three cities, being Vancouver, Victoria and New Westminster, and the damage analysis based on firm soil, which as Dr. Carlos Ventura, a civil engineer and lecturer at the university, points out, is not the case in many areas. “The City of Victoria is particularly at risk as soft soil is found on approximately half of the city blocks.”

The study results are based on 8,000 buildings in New Westminster, 3,000 in Victoria, and 20,000 in Vancouver. The analysis focused on different types of building materials used in these structures, and determined that wood was the most prominently used material. Of a wide range from mobile homes to concrete and steel structures, the study determined that non-reinforced masonry presented the highest risk of failure. However, in conclusion, the study confirms that the grade of soil has a significant impact on the resistance of structures to an earthquake. “The ef fects of geology may be very high depending on the soil type, strength of ground shaking and period of ground motion. Ground motion amplification and liquefaction potentials of the soil deposits in the area need to be evaluated.” Looking at Vancouver, Ventura says the potential loss per block within the downtown area as a result of a major earthquake is likely to be in the range of $1 million to $5 million. Loss in residential areas will probably be between 20,000 to $50,000 per block, he adds.

Graham Taylor, a seismic engineering consultant at TBG Consultants Ltd., concurs that the soil type beneath a building will have greater bearing on whether it can withstand an earthquake as opposed to the actual engineered structure of the entity. “Poor soils greatly exacerbate earthquake damage. Buildings on firm ground are not likely to suffer heavy damage even if they are poorly built.”

But, he warns, from a building design perspective, “we’re repeating the same mistakes as before”. Taylor believes that the National Building Code should be updated, particularly in high-risk earthquake zones. Specifically, he says that wood-based residential structures face far greater risk than most people appreciate. “The Northridge earthquake in 1994 inflicted heavy damage on wood frame residential buildings in southern California in excess of $15 billion.”

Taylor initiated a project titled “Earthquake 99” which involved the structuring of a full one floor residential structure within a lab on moving blocks to simulate the effects of various magnitude earthquakes. The project is currently in the process of testing a two level structure, and will be releasing its results by the end of this summer, he says. However, early results, combined with field investigations of structures under construction suggest that current building practices have to be made. “Contemporary Canadian housing is unduly vulnerable to heavy earthquake damage because most residential construction has been built in accordance with part-9 of the National Building Code of Canada. Part-9 exempts smaller buildings (almost all residential housing qualifies as smaller buildings) from specific earthquake design requirements on the basis that smaller buildings fare better than larger buildings in an earthquake. We do not share the same premise. We believe the part-9 earthquake exemption needs to be revised immediately.”

From field findings, Taylor notes that most residential structures are erected with “horizontal board sheathing” which significantly cheapens the construction process, but adds to earthquake vulnerability. The lack of “sheer walls” in residential structures, combined with the fact that most are not “anchored” to their foundations, places these structures at high risk, he says. “Horizontal board sheathing is potentially dangerous and should be prohibited. Horizontal board sheathing is used locally as a low-cost form of exterior sheathing in one storey and two storey buildings…Given the totally unprepared state of residential buildings in B.C., the need to initiate measures to substantially reduce earthquake damage is immediate.”

Paul Kovacs, executive director of the ICLR, notes that there is currently little incentive on the part of both the private sector and government in motivating the implementation of seismic engineered structures and upgrading existing facilities. Notably, interviews held with structural engineers suggest that they are not eager to press the need to build beyond existing code requirements as the additional costs would have to be justified in a highly competitive marketplace. And, from a government agency perspective, particularly local authorities, most public structures are self-insured, he observes. This has decreased the interest in prevention investment programs as many authorities hold the view that the federal or provincial government will step in with financial aid should a disaster occur.

This view is backed by Robin Gardner, the regional emergency management coordinator for the Greater Vancouver Regional District, in pointing out that, “the municipalities are key to an emergency response and mitigation strategy”.

Unfortunately, he adds, “most officials are faced with a cash-crunch, and no one wants to increase taxes. The attitude is, ‘an earthquake won’t happen while I’m in office’.” This apathy has to be rectified by communication, and coordinating a cohesive risk management mitigation strategy throughout the province, he emphasizes. Furthermore, he notes that most local government emergency response managers are held way down the management structure, and are therefore excluded from decision making. “We need to empower them [emergency response managers],” he says. This indifference to the risk at hand goes further to the public, Gardner adds, with few residents within the province’s earthquake prone areas having taken even basic mitigation steps such as bracing a water heater against the wall. “We can sell cornflakes and soap bars, but we can’t sell mitigation.”

Insurance changes

The B.C. Ministry of Finance and Corporate Relations is set to release a legislative discussion document later this year outlining a new structure to earthquake and property insurance, says Carol Anne Rolf, a director of the province’s regulatory streamlining group. The core factor of the suggested changes in the document is that “fire following an earthquake” will be separated from general property fire coverage. In essence, insurers will only be liable for claims on standard fire policies which do not relate to an earthquake – this is an issue which the insurance industry has been lobbying for some time.

With the upcoming provincial election and the strong possibility that the current ruling National Democratic Party (NDP) will not retain its position, Kovacs is optimistic that the all-important legislation will eventually be approved. At the moment, roughly 96% of B.C. residents hold general fire coverage which would cover them against a loss resulting from a fire from an earthquake. However, only 45% of homeowners and around 63% of all residents currently have earthquake insurance. With extreme fire losses likely to result from an earthquake, insurers in B.C. are facing a costing disadvantage as a result of the discrepancy between their fire exposures and premiums collected on earthquake risk.

Last year the B.C. government conducted a telephonic survey of 700 households in the Greater Vancouver Regional District (GVRD), Rolf explains. The purpose of the survey was to identify public attitude to the suggested change in insurance, as well as gauge their knowledge and preparedness to earthquakes.

One of the most significant findings of the survey is that B.C.’s residents hold the highest score in earthquake insurance at 45% of the population, compared with Seattle’s 12% and many other cities in California with less than 20%. The survey also revealed that about 40% of GVRD residents holding home insurance but not earthquake coverage, explained their reason as: “we don’t get earthquakes here”, and “we think our home is safe from damage”. This fairly large component of the survey underscores the fact that there is little knowledge of the true impact and danger of an earthquake striking the GVRD, she notes.

That said, however, the study showed that a significant number of residents who currently hold home and fire insurance would be willing to purchase earthquake insurance if the “fire following an earthquake” was removed from their standard cover. At the same time, relatively few of the respondents holding earthquake coverage indicated that they would not renew their policies if premium rates were raised in line with the fire risk. “Changes to home insurance that would move coverage for fire caused by earthquakes out of the basic policies and into the earthquake policies are likely to have some impact on purchase of earthquake insurance. General attitude measurement indicates that a sizeable segment of non-holders of earthquake policies would be inclined to buy earthquake insurance and a majority of current earthquake policyholders would renew ev en if premiums increased.”