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Common Causes of Large Losses in the Global Power Sector
The power generation industry, with its sizeable, fixed long-lifespan assets, has not been immune to climate-related challenges.
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 Sector analyses 150 of the largest insurance claims in excess of US$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 organisations 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 US$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 analysed, 57% of the total US dollar cost was attributable to location, technology or maintenance.
- Weather-related events, which accounted for only 12% of the losses sustained, accounted for 22% of the total claims cost in US dollars.
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