Meteor damage a reminder of space risks threat

The meteor blast in Russia last Friday was a timely reminder of the importance to the insurance industry of catastrophe modelling for extreme events such as meteor strikes and solar flares.

The Russia blast occurred when a meteor exploded over the city of Chelyabinsk (population 1 million) in Russia's central Ural Mountains, injuring hundreds and causing damage to buildings in six cities. According to the Russian Academy of Sciences, the massive meteor weighed 10 tons and entered the earth’s atmosphere at a speed as high as 33,000 mph.

Preliminary reports suggest that more than 3,000 homes and business sustained damage from broken glass, including a zinc factory where part of the roof collapsed.

Catastrophe modelling firm AIR Worldwide has stated that in many countries with developed insurance markets, a comprehensive multi-peril insurance policy generally will cover all risks that are not specifically excluded, meaning that meteorite damage would generally be covered. The dwelling portion of the homeowner policy is very broad and if damage from falling objects is not listed in the exclusions, it is generally covered.

AIR’s comments come shortly after the publication a report by Aon Benfield highlighting the degree of uncertainty that currently surrounds the implications of a major space weather event.

“Geomagnetic storms and extreme solar weather are a realistic threat to the world’s electrical power grids, telecommunication systems and global satellite navigation networks,” the report states.

“Re/insurance industry awareness of geomagnetic storms has grown in recent times, but accurate assessment of risk still remains in its infancy for all but a few niche sectors. The rapid emergence of technology and business dependencies means that mainstream re/insurance professionals are unlikely to be able to accurately price this risk, offer coverage or issue exclusions.”