In 2012, 25 million people were affected by power outages, more than half due to just five blackout events. Power blackout frequency and severity continues to increase due to aging electrical infrastructure, transmission capacity limits, deregulation demands and severe storm exposure. Total economic losses due to U.S. power outages are estimated to be $100 billion per year and the commercial sector accounts for more than 72 percent of the total.
Until now, the market has lacked a widely available and dependable tool to calculate the financial consequences of power outages, making it more challenging for utilities, businesses and insurance companies to assess potential losses from multiple perils.
The Blackout Risk ModelTM, powered by HSB and AER Core Technology and provided by Verisk Climate, comprises new technology and consulting services that help insurers and businesses predict the likelihood, severity, and financial exposure of U.S. electrical blackouts. The technology assesses the risk of electrical blackouts from hurricanes, winter storms, severe thunderstorms, peak power demands, human error, and other factors.
The technology incorporates data and analysis from HSB and Atmospheric and Environmental Research (AER), a division of Verisk Climate, including a database of possible weather conditions, satellite analysis of trees near distribution lines, proprietary knowledge of the electrical grid infrastructure, and detailed economic data.
Both AER and HSB have a long history in risk analysis and our alliance brings together our specialized experience and expertise in the blackout assessment field. The technology will be built upon AER’s expertise in climate and environment risk management solutions and the 147-year track record of HSB’s technical knowledge and leadership in equipment insurance and loss prevention.
AER, a division of Verisk Climate, is a leading provider of climate and environment risk management solutions. HSB, part of Munich Re, is the leading engineering and technical risk insurer in North America and the largest insurer of electrical equipment.
AER and HSB formalized the technology that we’ve been incubating independently for eight years. Our joint teams will now make it possible for stakeholders to plan for widespread blackouts caused by all perils and minimize and manage their impact across all lines of businesses. The strategic alliance between AER and HSB enables a significant advance in the blackout assessment field and will be a great benefit to the thousands of organizations and tens of millions of people affected every year by blackouts.
Download the AER and HSB Strategic Alliance brochure to learn about the new technology being developed by AER and HSB, and understand the unique expertise in blackout risk assessment that each firm contributes.
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Using the Blackout Risk Model technology and service enables insurers to:
The technology will empower risk managers in insurance and reinsurance, corporations and government agencies to take a strategic perspective on blackout risk, assess and optimize their risk exposure from potential events, and calculate potential losses when an event is imminent.
Insurers and reinsurers will benefit by being able to calculate, for all insured lines, the likelihood of loss to their business portfolio, the impact on their facilities and assess the probability of loss due to power outages.
For more information on the Blackout Risk Model, please contact Patrick Pollard at contact us.
Blackout Risk Model™ is a trademark of HSB and Atmospheric and Environmental Research, Inc.
"Until now, it was not feasible for a retailer or manufacturer to conduct a quantitative cost-benefit analysis associated with backup power facilities and emergency response actions. By applying this technology, businesses can gain insight into the potential for their distributors or suppliers to lose power based on where they are located within the electrical grid network." —Kyle Beatty, president of Verisk Climate
"The new Blackout Risk Model provides technology and services that will help insurers calculate their accumulated risk and loss potential. We’ve been modeling electrical blackout risk internally for a decade. Now, insurers will benefit from the enhanced technology developed by our joint teams." —Robin Luo, vice president of HSB
"HSB and AER are commercializing the blackout risk data and technologies that our firms built, calibrated and applied within our businesses over the past decade. Our joint teams will now make it possible for stakeholders to plan for widespread blackouts caused by a broad range of perils to help clients minimize and manage the impact across all lines of business." —Greg Barats, HSB president and CEO
"Infrastructure reliability has become a critical subject for insurers, supply chains and governments at all levels. The strategic alliance brings unique expertise and experience and enables a significant advance in the blackout assessment field." —Ron Isaacs, president and CEO of AER, a unit of Verisk Climate