Mark McAdams, high-hazard occupancy specialist for FM Global, maintains its underwriting requirements for power generation, mining and service interruption. McAdams spoke with NU about some of the common exposures for companies in the power-generation industry and the underwriting considerations that come into play with high-voltage risk.

What kinds of exposures are most common for companies in the power-generation industry, and what appropriate protections are needed?

What separates power generation from most other occupancies is the fact that the majority of losses are mechanical breakdown, followed by electrical breakdown. Equipment that continues to evolve shall continue to present exposures worth watching. This can be gas turbines, where manufacturers continue to test the limits of technology to squeeze out as much efficiency as possible, or wind generators, where it seems that every time we increase the size we learn new ways they can break. Time-element exposures continue to evolve as well. The evolution of how revenue flows for electric supply and distribution has created a system so complex that few risk managers or underwriters can safely say that they truly understand the financial impact of an unplanned outage.