Weather-related losses in the power generation industry are rare but expensive, according to a global study by Marsh.

Climate change is increasing the frequency of weather-related catastrophes and the sector, “with its sizeable, fixed, long-lifespan assets”, is not immune, the report says.

But power plants have dealt well with catastrophes, compared with similar-size property risks.

“For example, plant damage during the recent New Zealand earthquakes and Australian flooding was minimal, mostly due to the resilience of the facilities’ foundations.”

Most losses in the sector can be attributed to issues of location, technology and maintenance, according to the report, which analyses 150 large claims totalling $US1.8 billion ($1.94 billion) between 2004 and last year.

Machinery breakdown accounted for 76% of the losses and 57% of the total claims cost.

Weather-related events made up just 12% of losses, but 22% of the cost.

“All types of commercial and industrial locations are vulnerable to weather-related events,” Marsh Global Power Practice Chairman Philippe Du Four said.

“Reducing the impact… continues to be a challenge for the global power industry and robust risk management remains key.

“Stressing the value of monitoring and controlling both the technology employed, notably for reliability as well as efficiency, and ensuring a proper program of maintenance are clearly critical components of loss prevention.

“In turn, loss prevention is essential for protecting reputations, optimising operating efficiency and securing reduced premium rates from insurers.”