In 2012, the world avoided catastrophe by nine days.
A solar storm emitted a plasma cloud of gigantic proportions that summer. Had it hit the Earth, it would have done trillions of dollars in damage, wiping out communications and GPS satellites while causing so many transformers to explode that it would have taken down much of the electric grid for weeks, months or even a year. But the plasma cloud passed through the spot in the Earth's orbit where it had been nine days earlier and did almost no damage. Nine days....
The Earth wasn't so fortunate in 1859, when what's now known as a Carrington Event — named after one of the astronomers who saw the solar eruption — wiped out the world's telegraph system. And scientists say such a massive flare will surely hit the Earth again, with its now exponentially more wired and, thus, vulnerable electrical and electronic infrastructure. The only questions are: when, and how devastating will the flare be?
Models suggest that the likelihood of a Carrington Event is only about 1% in any given year, but the effects would be so devastating that we need to at least be running scenarios to see how we can help clients be more resilient while also making sure insurers would survive such a catastrophe.
Let's have a look.
The Carrington Event itself isn't what a reporter would call new news. While the near miss in 2012 received remarkably little coverage, we ran an article in 2014 on the potential danger that holds up quite well, and have been periodically raising the issue since then. This article in 2021 goes deep into the implications for insurers, partly by looking at a solar storm in 1989 that, while far less severe than a Carrington Event, showed in miniature the sort of damage one might cause. A solar storm in 2024 — again, far less severe than a Carrington Event — prompted me to revisit the issue, and, for those looking for a truly deep dive into the history of solar storms and their implications, our colleagues at the International Insurance Society published this piece that same year. As a solar cycle peaked last year, making intense storms more likely, we ran another piece on the potential implications.
What is new is a recent study that found, according to the subhead of a Wired article: "Scientists have long assumed that there’s an upper limit to the intensity of the solar winds that reach Earth. New research suggests there’s not—and the implications are alarming."
The article says:
"For years, scientists have believed that there is a natural limit to the intensity with which Earth responds to the most extreme solar storms. According to that idea, when the solar wind reaches very high values, Earth's magnetic field stops reacting proportionally, and its response enters a kind of 'saturation.' However, this new study suggests that perhaps that limit never existed. What appeared to be a physical phenomenon could, in reality, be an illusion caused by the way the measurements are analyzed."
In other words, our magnetic field may not offer the protection we long thought it did.
A Carrington Event is still seen as a truly rare occurrence — some models say one will hit Earth every 100 to 250 years, while I've seen models that say such an event is even rarer, coming just once a millennium. But the threat can't be dismissed as a black swan. When one hits, it won't be a total surprise. We know another Carrington Event — or even worse — will occur. So the threat is more of a grey swan, and there's no excuse for not planning at least at some level for when it hits.
The effects of a massive solar event would be beyond anything we've seen in the modern day. This wouldn't just be an extended blackout. The shutdown of the grid could be so total that we'd lose access to the financial system, meaning no ATMs or credit cards. We would lose much of our communication network because of damage to satellites as well as to the cell towers and WiFi that need electricity. Water purification systems would be down. Farmers would lose access to many needed supplies, endangering our food supply.
So insurers must help clients map out how they would keep their businesses operating or at least recover quickly — in the U.S., parts of the Atlantic Coast and upper Midwest seem to be most vulnerable, so backup capabilities located elsewhere might be wise. Generators, batteries (though many will be overwhelmed by a Carrington Event's electric surge), water supplies and so on should also be part of a plan, keeping in mind that something that may be routinely available now will be in excruciating demand if the electric grid goes down even for weeks, let alone months.
I think there are technology opportunities here, too. Solar power and batteries are improving so fast and dropping in price so quickly that they are providing unprecedented, decentralized power sources that could allow for considerable resilience even with the grid down for an extended stretch. I don't know just what would be involved in hardening them enough to withstand a massive electric shock, but doing so would greatly diminish the length of the damage from a Carrington-level event. The good news about such a solar storm is that we get about 18 hours of warning — the time between when astronomers spot a solar flare and when the storm hits the Earth — so there is time to switch power sources into bunker mode.
Insurers obviously also have to protect themselves so they can reliably pay claims and help the world get back on its feet. Insurers should cover as much risk as possible but have to stay in business. So they need to be careful as they underwrite risks that could be beyond measure when the next Carrington Event hits.
I'd suggest also working with government to develop a recovery plan, though I'm not optimistic. I suspect that even a White House that believed in FEMA, as the current administration clearly does not, would be vague and noncommittal. So I suspect that coordination between insurers and governments will largely have to be arranged after the fact — and that the finger-pointing and legal action will be mind-bending.
I hope I don't come across as a boy crying "wolf," having repeatedly raised an alarm for a dozen years that has yet to be borne out. But remember: The fable ends with a wolf appearing and eating all the sheep.
Cheers,
Paul