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With the solar cycle now near its peak, insurers are confronting an uncomfortable reality: extreme space weather is no longer a theoretical “black swan.” It is better described as a “grey swan” – severe and once rare, space weather is scientifically understood and increasingly observable.
The Sun follows an approximately 11 year activity cycle, oscillating between solar minimum and solar maximum. During periods of solar maximum, the Sun produces elevated numbers of sunspots, which are associated with unstable magnetic fields and violent energy releases.1
Solar Cycle 25 began in December 2019 and is thought to have peaked around mid 2025, with scientists observing stronger than expected activity across multiple indicators. History shows that the most severe solar events tend to cluster around these peak periods, increasing the likelihood of disruption to modern infrastructure.
Not all solar activity poses equal risk. Two phenomena matter most for insurers:
The most damaging insurance losses are typically associated with CMEs rather than solar flares alone, particularly where long transmission lines and high voltage transformers are involved.
The benchmark scenario for extreme space weather remains the 1859 Carrington Event, which caused widespread telegraph system failures across Europe and North America.3 While this occurred in a pre electrical age, a similar phenomenon today would interact with a vastly more complex and fragile technological ecosystem.
More recently solar events caused reportable disruptions and damage. Three notable such events are:
These incidents illustrate that space weather losses can manifest across many insureds simultaneously, creating accumulation risk rather than a single, well defined catastrophe footprint.
Lloyd’s latest systemic risk scenario estimates that a severe solar storm could expose the global economy to trillions of dollars in losses over a five year period, primarily through damage to power grids, satellite infrastructure, and prolonged business interruption.7
For insurers, the challenge lies in how these losses propagate:
Property Damage
from geomagnetically induced currents may damage transformers and electrical equipment. There is no stockpile of transformers, and they are often made to order, with lead times up to 5 years. If a sizeable event hit a region there would not be enough manufacturing power to provide new transformers for many years after the event.
This point is further exacerbated by aging power grids around the world and the absence of interconnectivity between grids to share power should an event occur. Additionally, there is not enough excess power globally to make up the shortfall even if power sharing were more prevalent.
Business Interruption (BI)
may be driven by prolonged power outages or unreliable grid performance.
Contingent BI and Supply Chain Losses
may be caused by failures in navigation, communication, and timing systems.
Satellite and Aviation Exposures
are likely and high risk, particularly where GPS, timing signals, or orbital assets are mission critical.
Strikes, Riots, and Civil Commotion
may cause widespread confusion and disruption, and power outages could lead to failure of security systems thus allowing rioters to engage in looting and physical damage during a prolonged disturbance.
Like other natural catastrophes such as windstorms or earthquakes, solar storms do not respect geographic boundaries, increasing the potential for correlated global loss.
One of the most concerning aspects of solar risk is its ambiguous treatment in insurance contracts. Solar flares and geomagnetic storms are rarely addressed explicitly, and coverage may hinge on whether losses are classified as physical damage versus non damage BI, utility service interruption, or excluded under electromagnetic or infrastructure related clauses.
This echoes the industry’s earlier experience with cyber risk, where “silent cover” only became visible after losses materialised.
As reinsurers, we are accustomed to evaluating large natural catastrophe events and assessing aggregation exposure. However, a CME event would present a fundamentally different set of challenges.
In the immediate aftermath, the primary concern would likely be power surge damage to critical infrastructure, including power stations and substations – particularly transformers, which have extended replacement lead times (often exceeding 36 months).
Notably, there may be limited immediate physical property damage in the traditional sense. The initial and most significant issue would be widespread power outages. Key considerations would be the duration of such outages and the cascading effects arising from prolonged disruptions to electricity supply.
Secondary impacts could include property damage resulting from power loss or electrical instability. Examples may include electrical fires within buildings, damage or burnout of IT infrastructure and servers, and potential fires at substations.
From a business interruption perspective, manufacturing downtime and operational disruption would be significant. However, the extent of coverage would depend on whether BI policies are triggered – typically requiring physical property damage. This raises an important question: Would losses stem from insured property damage, or solely from loss of power supply?
Further complexities arise in the context of supply chain disruption. The extent of coverage would depend on the availability and scope of contingent business interruption (CBI) provisions and applicable sublimits within policies.
Widespread disruption to global infrastructure could have substantial knock‑on effects on economies, including increased construction costs, logistical challenges, and extended repair and replacement timelines.
Business interruption losses could therefore be considerable, though their recoverability would depend heavily on policy wordings and coverage triggers.
Finally, policy response would require careful scrutiny. Key considerations include how primary insurance policies respond to solar or geomagnetic events, what cover is afforded under reinsurance treaties, and how losses from such a widespread and diffuse event could be aggregated.
Encouragingly, insurers and reinsurers are beginning to engage more seriously with space weather risk. This includes:
As solar activity continues to build, the question is no longer whether an extreme space weather event will occur, but when – and whether the insurance industry will be ready when it does.
Solar storms challenge traditional catastrophe thinking. They are infrequent, hard to model, and capable of causing widespread but uneven loss across sectors and regions. They are also scientifically understood, historically documented, and increasingly observable.
For insurers, these challenges creates both risk and opportunity. Those who engage early – by clarifying coverage, managing accumulation, and educating clients – can turn an emerging systemic threat into a source of resilience and differentiation. Those who do not may find themselves learning about solar risk not from scientists but from claims.
All internet links cited in the text of the article were accessed on 30 Jun. 2026.
Chief Underwriting Officer – Treaty UK, Ireland and Sub-Saharan Africa
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