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Earthquakes and predictions about the global economy made news this week.

Staff on November 23, 2016

Earthquakes dominated the news this week, with a damning report indicating that many Canadian insurers would fail in the event of a large earthquake. Japan too felt the impact of another temblor, though damage was minimal and injuries were few. In other news, Swiss Re predicts that the global economy will grow in the next two years and Ontario’s upcoming cap-and-trade program will not limit the province’s greenhouse gas emissions through to 2020.

Canada not ready for a major earthquake
A massive earthquake off the coast of British Columbia has the potential to cause widespread failure among insurance companies and trigger a domino effect across the financial sector, according to a new Conference Board of Canada report funded by the IBC, “Canada’s Earthquake Risk: Macroeconomic Impacts and Systemic Financial Risk.” The Conference Board’s analysis indicates that the fiscal and macroeconomic impacts of such an earthquake would be devastating. Insured losses that exceed $42 billion would surpass the level at which the industry is currently capitalized. Such an earthquake would result in $127.5 billion in total economic losses and could result in approximately 15,000 deaths.

Demand for emerging markets to drive insurance sector growth in 2017
Swiss Re predicts the global economy is expected to grow moderately over the next two years, supporting continued growth in insurance premium volumes, Swiss Re’s publication Global insurance review and outlook for 2017/18 shows. Growth in global non-life premiums is forecast to fall slightly from 2.4% in 2016 in real terms to 2.2% in 2017, and accelerate to 3.0% in 2018. In the life sector, global premiums are expected to grow by 4.8% in 2017 and 4.2% in 2018. The emerging markets, in particular emerging Asia, will be the main driver of premium growth in both the non-life and life sectors.

Blockchain technology both disruptive and beneficial to insurers
Novarica predicts the technology will have a significant long-term impact on insurers across the board.
If the technology proves viable, it could streamline paperwork and reconciliations for (re-) insurance contracts and accelerate information and money flows, while greatly improving auditability.
Blockchain enables digital contracts and transactions amongst multiple parties to be executed in a secure, transparent and auditable way. By establishing trusted relationships among all participants, it has the potential to provide a consistent, automatic contract execution environment where transactions and contracts are stored on a shared ledger, thus reducing the administrative workload of multiple stakeholders to ensure contract consistency and execution.

Ontario cap and trade won’t limit emissions through 2020
Ontario’s upcoming cap-and-trade program will not limit the province’s greenhouse gas emissions through to 2020, the environmental commissioner said Tuesday. The system comes into effect next year, but will be linked to California and Quebec’s market in 2018. When that happens, it could often be cheaper for Ontario polluters to purchase California allowances, Dianne Saxe said in a report.

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