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Rising outage risk shifts businesses from insurance to resilience investing
Insurance and business interruption coverage is getting more expensive or restrictive in some sectors, while power outages averaged 11 hours per US customer in 2024, nearly double the prior decade.
Insurance Business reports brokers are facing a changing calculation as contingent business interruption and service interruption coverage becomes more costly or harder to obtain in certain industries. At the same time, improving backup and on-site power options, including battery storage, microgrids, and backup generation, is giving businesses more ways to redesign outages out of their risk profile.
The shift is tied to grid stress and growing electricity demand. According to the Energy Information Administration, US electricity customers saw an average of 11 hours of interruptions in 2024, nearly twice the annual average of the preceding decade, with major hurricanes accounting for about 80% of outage hours.
Energy use is also rising quickly, the outlet notes. The EIA said in January that US electricity use was on track for its strongest four-year growth period since 2000, with large computing facilities a key driver, prompting brokers to push clients toward a three-way decision: accept exposure, buy insurance where available, or invest in resilience.
The outlet adds that the decision depends on an asset's age and design. Data centers, which typically build redundancy from the start, could account for 11.8% of total US electricity consumption by 2030, according to Berkeley Lab estimates, while Brown says older industrial facilities often have systems built decades ago before today's backup technologies existed.