Power Blackout Risks


 principles of insurability



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5.3.1. principles of insurability
Insurance clients benefit from protection against unexpected losses and peak risks as well as freed up capital 
which can be deployed otherwise. The insurance industry enables therefore economic growth and innovation by 
reducing volatility and providing capital relief. Depending on their needs and the insurance markets’ product 
range, coverage extent and conditions vary. In order to transfer risks to the insurance industry a set of criteria 
has to be considered:

randomness: The time and location of an insured event must be unpredictable and occurrence itself must 
be independent of the will of the insured (i.e. accidental).

assessability: The frequency that an event will occur and severity of the resulting damage can be estimated 
and quantified within reasonable confidence limits.

mutuality: A large number of endangered parties must join together to build a risk pool in which risk is 
shared and diversified at economically fair terms.

economic viability: Insurers must be able to charge a premium that corresponds to the underlying risk 
including capital costs and expenses. 


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crobriefing on Power Blackout Risks
5.3.2. current risk transfer solutions
Therefore, blackout related risks can be separated into insurable versus not insurable risks. 
insurable

Property damage (PD), business interruption (BI), insurance for utilities

BI extensions insuring failure of power supply for commercial and industrial enterprises

PD insurance for private households
not insurable

Unlimited and uncontrolled covers for generally insurable exposures

Frequent losses (e.g. short term power blackouts)

Operational risks 
Electricity producers, distributors and consumers of electricity have various options to insure risks arising from 
power outage.

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