Let’s Talk About Glorious, Sometimes Dangerous, Sunshine

Whether you want to call it solar wind, solar radiation, or a solar flare, there is a great deal to be considered if you are prepping for a geomagnetic event. When one realizes the seemingly limitless power of the sun you have to take a step back and wonder if a geomagnetic storm is the one event that everyone should prepare for as if they expect it to happen tomorrow.

Geomagnetic storms are increasing in frequency and severity even as I write this. The government has created special tools that any user can use to monitor the activities of the sun. Geomagnetic-Storms-effects-space-weather-technologyWhile the instrumentation used to collect and interpret the data is quite complicated, the reporting features used by NOAA are as simple as clicking a few check boxes.  Now, solar activity is monitored like the weather.

When insurance companies like Aon Benfield begin producing products to insure the losses of their customers because a geomagnetic storm caused severe damage,we should pay attention. While Aon Benfield believes that the risk is small they believe it is a viable market because the damage would be severe and have far-reaching consequences for both industry and the economy.   Aon Benfield has determined that the graphical representation of the risk is pear-shaped. This means they believe the likelihood of a geomagnetic event has a relatively low probability, but a high consequence.  Most likely, a solar event will cause damage in a localized area, much like a blizzard or hurricane.  Such a situation happened some years ago in Canada causing people in the local area to be with out power for a few days.

In the past insurance companies have covered damages to property as it normally occurs.  Except, in some incidents where they have been allowed to call an incident an act of God. An act of God is considered non-insurable. An example of such an event may include a cow standing in the middle of the road, in the dark of night, and someone would hit it with their car.  Most locations have since legislated that insurance companies must cover such things. The act of God clause still exists along with some added things such as government, military and terrorist act exclusions.

Another example of how an insurance company may or may not cover damages to property is mold. When toxic mold first became known as a danger to health and structure, people had to sue their homeowners insurance company to get them to pay for damage caused by mold. Shortly after these lawsuits were made public, insurance companies began specifically excluding mold from homeowners policies because it was a high frequency and high consequence risk. For a while the same companies sold a rider policy to cover mold damage. Today most companies do not ask if you would like mold coverage.

In the same way, many insurance companies may or may not cover damages caused by solar events.This is important to know because many things in your home and car could be damaged and you might want your insurance to pay the cost of repair or replacement.  Because Aon Benfield is launching an insurance program to cover this specific cause of damage, it would be my guess that this event will not be covered and could very easily be considered an act of God and not covered under a standard auto or home insurance policy.

Aon Benfield believes it can only cover minor to moderate solar events and that severe events would be catastrophic beyond the scope of their new insurance policy.  Their plan is to use the fears of people to make money selling policies while they hope there are no solar events.  Since terrorist attacks and military actions are excluded from almost all policies, they would not have to pay out for an EMP event as a part of war.  In the case of a naturally occurring, wide scale event, insurance companies are willing to take the risk that they may not be able to afford to pay out claims and could bankrupt themselves.  As a prepared society, we should measure the risks for ourselves and determine if we need to plan for such an event, maybe even buy a little insurance.