OSFI Calls Earthquake Risk Underpriced And Expects Canada's Record 2024 Insured Losses To Double Within Five Years

Reported remarks, official notes and the role of the regulator

OSFI regulates federally chartered banks and insurers. Its job is solvency: making sure institutions hold enough capital to pay claims and survive shocks. It does not set your premium, but its view of risk shapes how much capital insurers must hold against it, and capital has a cost that eventually reaches pricing.

As reported in Insurance Portal's account of the session, Routledge was asked about a simulation by the Property and Casualty Insurance Compensation Corporation (PACICC), the industry-funded fund that protects policyholders if an insurer fails. He described major-earthquake risk as "an underpriced and underappreciated financial risk bearing down on all the industry," estimated a 50% chance of such an event within 50 years, and said it "will destroy capital in the insurance industry." The session was moderated by Celyeste Power, president and CEO of the Insurance Bureau of Canada (IBC).

OSFI's own published notes add useful detail and one important nuance. The speaking notes posted by OSFI date the fireside chat to September 28 in Québec City and describe earthquake as "one of the most significant catastrophic risks facing Canada." They say the goal is "not a 'backstop' but some form of pre-planned resolution framework" that could respond if insurers become non-viable after a catastrophic quake, and that decisions on any federal arrangement belong to governments and Parliament.

A real record, but not twice the previous one

The historical part of Routledge's comment is solid in direction. According to CatIQ, Canada's catastrophe loss index provider, insured catastrophe losses reached $8.5 billion in 2024, the largest year on record. Four events each topped $1 billion: the Calgary hailstorm, the remnants of Hurricane Debby, the Jasper wildfire and flooding in southern Ontario. Catastrophe claims exceeded 273,000, against the previous record of 197,000 in 2016.

The size of the jump is where the reported comment needs care. Insurance Portal quotes Routledge as saying 2024 damage was twice as high as in 2016. CatIQ's inflation-adjusted figures do not show that.

On those numbers, 2024 was roughly 37% above 2016, not double. A later IBC Quebec summary puts 2024 at $9.1 billion, which is about 47% above 2016. Either way, 2024 was a clear record. The comparison was overstated, but the trend it describes is not in dispute.

The forward-looking part is a projection. Routledge reportedly said that "at some point in the next three or five years, we're going to double it," linking the increase to a warming climate. That would mean an insured catastrophe year somewhere around $17 billion or more. It is one regulator's expectation, not a forecast with a published model behind it, and it should be read that way.

For a decade-long view of how these losses have built up, Homeowner.ca's earlier coverage is a useful companion.

See Canada's Decade of Climate Catastrophe: Insured Losses Nearly Tripled to $37 Billion.

Translating long-horizon odds into the years you own a home

A probability over 50 years is easy to misread as a near-term forecast. It is not. If the chance of an event over 50 years is 50%, the implied chance in any single year is about 1.4%. That is small in a given year and substantial over the time most people own a home.

Routledge's 50% figure was not accompanied by a published method in the reporting. The most widely cited Canadian figure is lower. In its earthquake analysis, IBC cites Natural Resources Canada as giving British Columbia a 30% chance of a significant earthquake in the next 50 years. IBC also estimates a repeat of a magnitude 9.0 event could cause about $128 billion in total economic losses.

The annual and 25-year figures are straightforward conversions, assuming the odds are spread evenly over time. They are not predictions about when an earthquake will happen.

The same IBC analysis shows why the probability matters so much for Montreal and Quebec owners specifically. IBC estimates only 4% to 7% of Quebec residents carry earthquake coverage, against roughly 50% to 65% in British Columbia.