The big one: How a major catastrophe could wipe out Canada's $232-billion insurance industry

financialpost.com:

In the middle of the afternoon on March 11, 2011, a major earthquake struck off the northeastern coast of Honshu, Japan’s main island, triggering a tsunami that sent a 40-metre-high wall of water cascading towards the coast. The inland surge from the tsunami washed away thousands of homes, devastating roads and knocking out power across much of the country. At the island’s Fukushima Daiichi nuclear plant, backup generating capacity was wiped away, too, and within days the plant fell into meltdown and began spewing toxic radioactive material into the environment, forcing the evacuation of thousands. The multi-pronged disaster, previously thought impossible, left more than 15,000 people dead and caused more than US$200 billion in damage, making it one of the most devastating in modern times.

It also sent tremors through the global insurance industry.

In Canada, one of the few developed nations without bailout tools available to government and regulators if property and business insurers experience massive losses, it led to a grim realization: a similar catastrophe in one of Canada’s major earthquake hot spots would not only have a devastating human toll, but could wipe out a large swath of the country’s $232-billion property and casualty insurance industry, sending aftershocks across the economy.

The revelation led to urgent talks between government and industry, which have spawned reams of studies, papers and proposals from academics and expert committees over the past dozen years or so. But so far, no concrete action has been taken to bolster the system.

Canada remains the only G7 nation without a way for government and financial regulators to intervene to keep insurers solvent — or at least steady enough to work through