Event: Failure of the Hydro-Québec power grid, 1989
Location: Quebec, Canada
Economic cost: Total economic loss of $8m.
Description: On 13 March 1989, geomagnetic-induced currents overloaded the transformers of the Hydro-Québec power system and in less than two minutes the power grid failed.
Damage: The outage lasted for nine hours and affected more than six million people. The average electricity customer interruption cost for medium and large industrial clients in the US is $93,890 for an eight-hour interruption. But these losses would pale into insignificance in the face of a larger solar storm such as the Carrington Event of 28 August to 2 September 1859. This is regarded as the most extreme space weather phenomenon on record and a similar event now could affect up to 40 million people and cost several trillion dollars.
Insight: Power shortages following a Carrington-size solar storm could affect event cancellation, business interruption, contingent business interruption, public and employers’ liability, and directors’ and officers’ policies. Depending on the length of a disruption, financial markets could be hit hard, further affecting insurers’ claims volumes and investment returns. To safeguard against future incidents Hydro-Québec has spent almost $1bn installing a series of safety measures including transmission line series capacitors.
Insurance solutions: The Lloyd's market offers cover in relation to Solar storm. Examples of this include but are not limited to: Commercial property, event cancellation and contingency insurance, damage and non-damage business interruption and contingent business interruption, public liability, employers' liability, directors' and officers' and other professional indemnity products.
Image: A solar flare big enough to engulf the Earth erupts from the surface of the Sun in 2002 (Getty Images)
Sources: Berkeley Lab; Government of Canada; Swiss Re; US House Homeland Security Committee
