Police officers search victims from debris of damaged and burnt buildings in Wajima in the Noto peninsula facing the Sea of Japan, northwest of Tokyo, Sunday, Jan. 7, 2024. Monday's temblor decimated houses, twisted and scarred roads and scattered boats like toys in the waters, and prompted tsunami warnings. THE CANADIAN PRESS/AP-Hiro Komae
TORONTO – The head of Canada’s financial institutions regulator says it’s important to develop a backstop for the insurance industry as the risk of catastrophes increase.
Peter Routledge, who leads the Office of the Superintendent of Financial Institutions, says sooner is better than later for developing a system to see the industry through a major catastrophe such an earthquake.
Speaking at a catastrophe insurance conference in Toronto, Routledge said a system based on similar principles to how the Canada Deposit Insurance Corporation backs up the banking sector would be helpful.
He says a major earthquake in Vancouver could potentially cause between $35 billion and $40 billion in damage and create systemic problems in terms of absorbing the aftermath.
The federal government committed in the 2023 budget to look into solutions to earthquake insurance and other evolving climate-related insurance market challenges.
Routledge says that on climate risk, the regulator’s focus is on pricing in the costs, which should lead private enterprise to transition away from fossil fuels and work on adaptation.
This report by The Canadian Press was first published Feb. 6, 2024.
