Power-generating companies have had at least one major loss in excess of $25 million each year since 2005, and the continuing trend could lead to price and capacity issues if insurers begin to leave the market, according to a report from insurance-broker Marsh.
“Insurers are reconsidering their stance on pricing and conditions for the global-power industry following sustained heavy losses arising from machinery breakdown, fire and explosion, natural perils and associated business interruption,” says Philippe Du Four, chairman of Marsh's Global Power practice in a statement. “Improving risk-management techniques to reduce claims frequency and costs should be a business imperative for power organizations.”
The power industry has a number of competing concerns that are contributing to the losses. While demand for power is up globally, requiring generating plants to perform efficiently, the Marsh report notes that the push for efficiency may lead operators to “ask insurers to cover new and allegedly unproven technologies” at new plants.
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