Ottawa Proposes Earthquake Insurance Facility
The federal budget sets up a cost-sharing facility to help the property and casualty market absorb losses from a major earthquake.
Updated on Nov. 6, 2026 in Insurance
Live Poll
Should the federal government backstop insurers against a catastrophic earthquake?
Canada's federal budget establishes the Canadian Earthquake Insurance Facility, which would provide up to $50 billion in emergency funding to the property and casualty insurance sector after an extreme earthquake. Ottawa will introduce legislation in Parliament to establish the facility.
Why it matters
The Insurance Bureau of Canada estimates a severe earthquake could generate insured losses of about $52.6 billion, above the roughly $50 billion in capital held by the sector to cover all claim types. Uptake of earthquake coverage varies sharply, from 50% to 65% in British Columbia to 4% to 7% in Quebec.
The Insurance Bureau of Canada estimates a severe earthquake could produce about $52.6 billion in insured losses, against roughly $50 billion in industry capital. The budget's design details and how the $50 billion facility ceiling would be shared remain unspecified until legislation is tabled.
The players
Insurance Bureau of Canada
The Insurance Bureau of Canada is the national trade association representing the country's private home, auto and business insurers.
Insurance Brokers Association of Canada
The Insurance Brokers Association of Canada is the national association representing licensed insurance brokers across the country.
Office of the Superintendent of Financial Institutions
The Office of the Superintendent of Financial Institutions is the federal regulator responsible for supervising banks, insurers and pension plans in Canada.
The details
The facility is a rules-based, pre-agreed cost-sharing formula applied to extreme earthquake losses, rather than an ad hoc bailout. The 2025 budget committed to consultations, and the 2026 budget commits to legislation.
Timeline
April 2026: The Insurance Bureau of Canada submitted a cost-sharing proposal to Finance Canada modelled on the US Terrorism Risk Insurance Act.
2025 budget: Ottawa committed to consultations on earthquake insurance.
2026 budget: Ottawa committed to introducing legislation to establish the facility.
Market Dynamics
The proposal follows the model of the US Terrorism Risk Insurance Act, which created a federal backstop for catastrophic losses that private insurers could not absorb alone. Canada's version would apply that logic to earthquakes, a peril where the sector's roughly $50 billion in capital is close to the projected $52.6 billion loss from a severe event.
For homeowners in high-risk provinces, the facility could affect the availability and pricing of earthquake coverage over time. Households in British Columbia already buy earthquake insurance at high rates, while uptake in Quebec remains between 4% and 7%.
The takeaway
Homeowners should review whether their policies cover earthquake damage, since uptake is uneven across provinces and the facility's details are not yet final. Watching the legislation as it moves through Parliament will show how coverage and costs may change.
Further reading
For broader coverage of coverage rules and costs, see Insurance in our personal finance section.
Source note: This article includes information reported by Insurance Business.
Live Poll
Should the federal government backstop insurers against a catastrophic earthquake?
