Explosions responsible for two-thirds of the largest energy losses

Explosions account for nearly two-thirds of the largest property damage losses in the global energy sector over the past 40 years, research by Marsh has found.

In its report The 100 Largest Losses, the brokerage firm estimates that the 100 largest losses sustained by the energy sector since 1974 exceeds $33bn. Of that, $21bn can be attributed to explosions.

To help energy companies with modelling the financial impact of explosions, Marsh has launched Marsh BLAST, developed with engineering consultants Baker Engineering and Risk Consultants.

The new explosion model allows energy companies to calculate the maximum property damage loss across their global assets, as they undertake insurance risk assessment surveys.

“The updated methodology will provide better estimation of losses resulting from explosions and enable the prioritization of risk mitigation and risk transfer measures,” said Andrew Herring, leader of Marsh’s energy practice for Europe, the Middle East and North Africa.

“Investment in risk modelling and management needs to continue, even in the current cost-cutting climate, to reduce the frequency and impact of major loss events where the cost is significantly higher than any potential expense savings.”