Getting protected

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Lack of perceived volatility – but not actual volatility – in electricity pricing and higher insurance premiums have led to a huge drop in power insurance contract volumes. Global reinsurer Swiss Re puts the reduction at around 300% down from a booming 2001. Such a big fall indicates that many risk managers are denying themselves the use of a valuable tool in their risk portfolios.

According to credit rating agency Standard & Poor’s (S&P), insurance premiums in the power industry have