Severe Weather, Aging Power Grid Increase Costly Blackout Risks
Lexington, Mass., and Hartford, Conn., May 29, 2013 — Atmospheric and Environmental Research (AER) and The Hartford Steam Boiler Inspection and Insurance Company (HSB) announced today a strategic alliance that will provide a technology and services solution to comprehensively understand and assess blackout risk in the United States. The technology will be used by insurers and reinsurers, commercial and industrial firms, and other businesses.
Electrical blackouts are on the rise across the U.S., costing businesses and consumers more than $100 billion annually and inconveniencing millions of people. So far, the market lacks 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.
“Severe weather and other factors have increased the number and duration of blackouts, causing disruptions and economic losses to grow exponentially,” said Greg Barats, HSB president and chief executive officer. “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.”
“The strategic alliance between AER and HSB brings unique expertise and experience to the blackout assessment field,” said Ron Isaacs, AER president and chief executive officer. “The alliance enables a significant advance in this area and will be a great benefit to the thousands of organizations and tens of millions of people affected every year by blackouts. 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.”
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. The technology will be built upon the 147-year foundation of HSB’s technical knowledge and leadership in specialty insurance related to the failure of critical infrastructure and AER’s expertise in natural hazard analysis and remote sensing.
Atmospheric and Environmental Research (AER) helps businesses and the government anticipate and manage climate- and weather-related risks. Insurance, energy, and investment firms count on AER to help decrease their weather-related losses and increase profitability by integrating state-of-the-art climate science and weather information into their planning and decision processes. Government agencies such as NOAA, NASA, and the Departments of Defense and Energy rely on AER’s scientists to help solve weather- and climate-related problems of vital national importance in energy, environment, national security, and climate change. Established in 1977 and headquartered in Lexington, Massachusetts, AER is a Verisk Analytics (Nasdaq:VRSK) company. Please visit www.aer.com.
Hartford Steam Boiler (HSB), a member of Munich Re’s Risk Solutions family since 2009, is a leading engineering and technical risk insurer providing equipment breakdown insurance products, other specialty coverages, and related inspection services and engineering consulting. Founded in 1866, HSB's difference is grounded in extensive technical knowledge with over 50 percent of its staff engineers, inspectors and technical personnel around the globe. We leverage our knowledge to anticipate future risks and develop a range of specialized solutions that enable our clients to build deeper and more profitable customer relationships. HSB holds A.M. Best Company’s highest financial rating, A++ (Superior). www.hsb.com
About Verisk Analytics
Verisk Analytics (Nasdaq:VRSK) is a leading provider of information about risk to professionals in insurance, healthcare, financial services, government, and risk management. Using advanced technologies to collect and analyze billions of records, Verisk Analytics draws on vast industry expertise and unique proprietary data sets to provide predictive analytics and decision support solutions in fraud prevention, actuarial science, insurance coverages, fire protection, catastrophe and weather risk, data management, and many other fields. In the United States and around the world, Verisk Analytics helps customers protect people, property, and financial assets. For more information, visit www.verisk.com.
About Munich Re
In the U.S., Munich Re provides access to a full range of property and casualty reinsurance and specialty insurance products through Munich Reinsurance America, Inc., American Modern Insurance Group and Hartford Steam Boiler Group. Munich Re stands for exceptional solution-based expertise, consistent risk management, financial stability and client proximity. This is how Munich Re creates value for clients, shareholders and staff. In the financial year 2012, the Group – which combines primary insurance and reinsurance under one roof – achieved a profit of €3.2bn on premium income of around €52bn. It operates in all lines of insurance, with around 45,000 employees throughout the world. With premium income of around €28bn from reinsurance alone, it is one of the world’s leading reinsurers. Especially when clients require solutions for complex risks, Munich Re is a much sought-after risk carrier. Its primary insurance operations are concentrated mainly in the ERGO Insurance Group, one of the major insurance groups in Germany and Europe. ERGO is represented in over 30 countries worldwide and offers a comprehensive range of insurances, provision products and services. In 2012, ERGO posted premium income of €19bn. In international healthcare business, Munich Re pools its insurance and reinsurance operations, as well as related services, under the Munich Health brand. Munich Re’s global investments amounting to €214bn are managed by MEAG, which also makes its competence available to private and institutional investors outside the Group.