Insurance losses could be as high as $70 billion in the US from one peril
According to a report from Lloyds, if the power grid in the United States were to be attacked the cost would be massive.
Lloyds of London has now released a new report that has shown that if the Northeast U.S. power grid were to fall victim to a cyber attack, the insurance losses would be tremendous and far-reaching.The economic losses that would occur from such an event could actually reach a trillion dollars.
Beyond financial disruptions, there would also be issues with water supply and transportation. The insurance losses were predicted to be over $70 billion. This, above and beyond the millions of people across the country who would be left without power. This “Business Blackout” report from Lloyds and the Center for Risk Studies at the University of Cambridge looked into the chilling impact on the economy and the insurance industry if a major cyber attack should occur, such as on the American power grid.The report worked with a scenario that would have darkened 15 states and generated massive insurance losses.
The
specific scenario that was analyzed within the report considered the
situation in which hackers would destabilize segments of the American
power grid. This would send Washington D.C. and 15 states into complete
darkness. Approximately 93 million people would be left without
electricity.The experts forecasted that in such a situation, there would be an increase in deaths as safety and health systems crumbled. There would also be a reduction in trade as ports would be forced to close. Water supply would be disrupted as electric pumps failed. Transportation networks would be left in complete chaos as infrastructure completely broke down.
The total impact to the American economy was estimated to be around $243 billion, but there could be more than $1 trillion in economic losses if every worst case scenario played out. In terms of insurance losses from claims, the most likely amount would be around $21.4 billion, but that could rise as high as $71.1 billion if all of the various worst case scenarios should occur due to this type of cyber attack on the power grid.