Common Causes of Large Losses in the Global Power Sector
Analyzing 150 insurance claims in the global power and utilities industry, we found that weather-related losses are disproportionately higher than other operational losses.
Stressing the value of monitoring and controlling the technology employed, notably for reliability as well as efficiency, and ensuring a proper program of maintenance are clearly critical components of loss prevention.
While weather-related losses remain comparatively rare in the global power generation sector, their financial impact is considerably higher than other operational loss events.
Common Causes of Large Losses in the Global Power Industry analyzes 150 of the largest insurance claims in excess of USD 2 million from 2012-2014 on accounts placed through Bowring Marsh, Marsh’s wholesale international placement division.
The report provides unique insight into the causes and value of large losses in the global power industry and aims to help organizations improve their risk management controls.
Key findings include:
- The majority of operational power generation losses are attributed to either one or a combination of issues relating to location, technology, and maintenance.
- These losses total more than USD 1.8 billion, which includes both settled losses and reserves for losses that remain ongoing.
- While machinery breakdown accounted for three quarters (76%) of the losses analyzed, 57% of the total cost was attributable to this type of event.
- Weather-related events, which accounted for only 12% of the losses sustained, accounted for 22% of the total claims cost.