Lloyd’s has warned insurers that a solar storm scenario could cause a £2.4trn ($3bn) global economic loss over a five-year period.
In its latest systemic risk scenario, published today, Lloyd’s said modelling shows extreme space weather could lead to economic losses between $1.2trn in the least severe scenario and $9.1trn in the most extreme.
The $2.4trn headline figure is the probability weighted average across the three severities that were modelled.
Lloyd’s said North America is likely to be the most affected by extreme space weather, with a potential economic loss of $755bn, followed closely by Europe at $697bn. With risks this astronomical, the industry might have to brace for impact.
The systemic risk scenario, developed in partnership with the Cambridge Centre for Risk Studies, models the impact of a hypothetical solar storm on critical infrastructure. Disruptions could affect energy grids, navigation, communications, and financial systems globally.
Rebekah Clement, Lloyd’s corporate affairs director, said: “Historically extreme space weather has been rare," however, by insurers equipping businesses, governments and insurers with data-based models, the industry can "encourage effective preparation and stronger collaboration.”