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The downtown skyline and cranes at Port Metro Vancouver are seen in the distance behind houses in east Vancouver, B.C., on Wednesday September 23, 2015.DARRYL DYCK/The Globe and Mail

Municipalities in southwestern British Columbia are considering buying insurance to bring some crucial infrastructure back online quickly in the event of an earthquake.

The province faces a 1-in-3 chance that an earthquake strong enough to cause significant damage will hit its western edge in the next 50 years, according to Natural Resources Canada. The shaking ground and subsequent tsunami could incapacitate key ports, disrupt global supply chains and wipe out many homes. It could also destroy infrastructure crucial to the functioning of many communities, such as water and gas lines, roadways and bridges, as well as damaging hospitals, schools and other government structures.

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Some of the most at-risk municipalities have questioned whether funding from the province – and even from the federal government – would be enough to rebuild and manage through the "big one."

"If you can't provide sewer and water to a neighbourhood, people can't live there. If they can't live there, they don't want to pay their property taxes. And if they're not paying property taxes, what are municipal governments going to do for money?" said Tom Barnes, chief executive officer of the Municipal Insurance Association of British Columbia (MIABC), which co-ordinates liability and some property insurance for 170 local governments, which also own the organization.

Mr. Barnes said MIABC began considering earthquake insurance about four years ago when some municipalities expressed concerns about how they would bring crucial water systems, as well as roads and buildings, back online after a disaster.

Under the current system, aid for the municipalities would come through the Disaster Financial Assistance Arrangements (DFAA) program, where the federal government provides financial help to the provincial and territorial governments in the wake of major natural disasters. It's up to the provinces to distribute these funds.

The Ministry of Public Safety said in a statement that it has been changing its approach to natural disasters to "better identify risks, plan for and prevent natural disasters and the economic disruption that comes with them." Work with municipalities on earthquake-disaster prevention, mitigation and preparedness is part of that effort.

When Mr. Barnes considered the complex structure of these DFAA agreements, he found that there would still be a significant funding shortfall and it would be a challenge for local governments to fill the gap, particularly if federal money is slow to arrive. "The bottom line was, assuming all goes well and you get full payment promptly for all that stuff, this program will reimburse local governments for about 80 per cent of the damages," he said. "That's the only thing in place right now."

In the lower mainland of British Columbia, including Vancouver, there is about $97-billion worth of uninsured municipal infrastructure, according to the MIABC's analysis, done in partnership with reinsurance companies. If 10 per cent of it were damaged and needed to be replaced, there would still be an unfunded liability hole close to $2-billion wide.

So 22 municipalities in that region are considering joining together to tackle the problem. It's a small number of local governments representing more than half of the provincial population.

Munich Re is one of the reinsurers that has been working to develop an insurance plan focused on infrastructure loss, and Canadian chief executive officer Philipp Wassenberg said the product could be ready in two months. But getting approvals from more than five municipalities is essential to the plan's success, since any fewer would not create a large enough pool of money for reinsurers to manage.

If approved, the municipalities could reach about $200-million in coverage toward a really big earthquake within five years, Mr. Barnes said, positioning them to respond quickly in an emergency. But getting approvals isn't certain – it could take two years to put the insurance plan into action, he said.

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