Electrical blackouts are on the rise in the US, costing businesses and consumers more than $100 billion annually and inconveniencing millions of people. But so far insurers, companies, municipalities, government agencies and other organizations lack a widely available and dependable tool to calculate the financial consequences.
Understand and assess blackout risks
In response, Hartford Steam Boiler and Atmospheric and Environmental Research (AER) have announced a strategic alliance to develop technology and services to comprehensively understand and assess the blackout risk. The technology will be used by insurers and reinsurers, commercial and industrial firms, and other businesses.
Plan for widespread electrical blackouts
“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,” said Greg Barats, HSB president and CEO. “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.”
“Infrastructure reliability has become a critical subject for insurers, supply chains and governments at all levels,” said Ron Isaacs, AER president and CEO. “The strategic alliance brings unique expertise and experience and enables a significant advance in the blackout assessment field. New technology and tools are essential as weather events become more extreme and frequent, the power grid ages, and other risks threaten our power supply.”
Technical knowledge, environmental risk management
The technology will be built upon the 147-year track record of HSB’s technical knowledge and leadership in equipment breakdown insurance and loss prevention and AER’s expertise in climate and environmental risk management solutions. Read more about how the strategic alliance combines the technical resources of two industry leaders.
Important benefits for insurers and reinsurers
Through the alliance, HSB and AER are developing technology that will enable insurers to:
- Predict the severity of business impacts from future power outage events
- Determine portfolio risk accumulations and the probability of insured loss with confidence
- Calculate the loss potential to current and future coverages which will inform risk-based pricing
- Assess how blackout risk varies by geographic and grid area
Important benefits for businesses and broker clients
The technology developed by HSB and AER will enable businesses to:
- Assess the likelihood of a power outage
- Understand backup power resource needs to sustain continuity
- Consider where to locate backup facilities
- Assess coverage needs related to power outages
Assess and optimize blackout risk exposure
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 losses when an event is imminent.
HSB and AER are leaders in risk analysis services
Both HSB and AER have a long history in risk analysis services. HSB, part of Munich Re, is a leading engineering and technical risk insurer in North America and the largest insurer of electrical equipment. AER, a unit of Verisk Analytics, is a leading provider of climate and environmental risk management solutions.
- Download the brochure “Power outage risks are on the rise: are you prepared to manage the risks of blackouts to your portfolio?”
- View more about the AER and HSB strategic alliance to develop technology and services to calculate the consequences of power outages [This links to the HSB-and-AER landing page which will be updated in summer and autumn with more links as we introduce more content.]
Read the press release AER and HSB to Develop Tech Tool to Forecast Blackouts.