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Indian Blackout a 'Wake-up Call'

This week's massive power outages should remind companies operating in emerging markets to check their coverage for power interruptions.

By Dave Lindorff | Updated on August 02, 2012
An unprecedented blackout of half of India that left more than 610 million people—almost a tenth of the world’s population—without power has exposed the shockingly poor electrical grid in the world’s second-largest nation. It also exposed the inadequate insurance coverage most global companies have for such potentially disastrous events.

“In general, U.S. firms operating abroad are not well-covered for power-outage-related service interruptions,” says Jeff Phillips, a partner at risk management, forensic accounting and loss advisory firm Dempsey Partners. Most companies, he says, don’t even know what kind of coverage they have paid for.

“I can tell you that since 2001, with almost every single claim I’ve been involved in, there’s been some surprise to the policy holder—some coverage limit they didn’t know about, some exclusion they didn’t anticipate, some deductible amount that was larger than they had expected,” says Phillips, pictured at right. “There’s almost always some surprise. Insurance contracts are the only case where managers will pay millions for a contract they don’t even see for months, and that they often don’t read when they finally get it.”

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