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More than 95 % of the losses are not insured in case of earthquake in Quebec



13 July, 2017 13:30

If an earthquake of magnitude 7.3 on the Richter scale occurred in the zone séismique de Charlevoix, the insured losses represent only 4.6% of the losses residential total 0.48 billion us dollars (G$) 10.6 G$, according to a report by reinsurer Swiss Re. These costs would represent around 8 % of the GDP of the province, an economic loss of$ 30 billion, which would make the disaster the most expensive in Canada’s history.

For the province, the reinsurer believes that the residential portfolio is located 1 210 G$. Of this figure, only 40,7 G$, or 3.4 %, are insured against earthquakes.

Quebecers are unaware that they live in areas at risk

If Vancouver and Victoria in British Columbia, the rate of owners protected against earthquakes is 65 %, this rate drops to 2 % for the city of Quebec and the rest of the province, with the exception of Montreal, where it is 5 %.

Swiss Re explained these data particularly low by the fact that the majority of Quebecers are unaware that they reside in at-risk areas. Although 70 % of the population resides in a high-risk area, 90 % of residents are totally unaware of the potential danger, and minimize the risk of occurrence and of damage.

Because of this, the reinsurer asserts that these persons do not sufficiently protect their assets more important because their assessment of risk is below their threshold of concern.

Lack of knowledge of insurance products

In addition, many believe that their police housing includes a protection against earthquakes, or don’t know that an optional coverage available to them. In fact, 58 % of respondents believe that their fire protection covers them against earthquakes, given that Swiss Re describes as » worrying «.

Many believe, moreover, that in the event of a disaster, the program of government shall compensate, this is wrong when insurance coverage is affordable is available, reminiscent of Swiss Re. «The federal government provides financial assistance to provincial governments under the financial assistance Arrangements in the event of a disaster for some of the expenses and damages caused by natural disasters. However, these assistance programs have been designed to cover only damages related to events which are not insurable. «

Significant economic consequences

The low rate of insurance against earthquakes could increase the defects of the mortgage. If the average household has an income of 55 $ 200 and a mortgage of $ 137,000, » it is easy to see that without cover against the risk of earthquake, many families may find themselves financially to events seismic major «. Many would be forced to borrow to rebuild their homes, or continue to pay loans for a house destroyed.

Thus, 47 % of Quebecers would be with a loan to value ratio of over 80 %, compared to a ratio of 45 %, for the repair or reconstruction of their home, if the loan requested is $ 100,000 for a home worth $ 227,000. They could be denied credit or to impose an insurance default in the payment compulsory.

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