When the sky turns red: insurers look up as solar storms surge

It’s pretty, but it also offers warning of a possible $4.1 trillion hit

When the sky turns red: insurers look up as solar storms surge

Insurance News

By

From Dunedin’s Brighton Beach to the Taieri Plains and as far north as Mount Cook, New Zealanders were treated to a rare spectacle this week: the aurora australis streaking across southern skies in ribbons of crimson and green.

Social media lit up overnight with photos from Waihola Lake, Roxburgh, Cromwell and Ōreti Beach — a Southern Hemisphere light show triggered by a severe G4-class solar storm, one of the strongest in recent years.

“We’re currently in a pretty high activity period with our sun, and the aurora is a direct result of solar activity interacting with the Earth’s magnetic field,” said Te Whatu Stardome astronomer Josh Aoraki.

At the peak of the storm, even residents near Christchurch caught a faint glow on the horizon — proof that the event was powerful enough to reach latitudes rarely graced by the southern lights.


The beauty — and the business-risk beneath it

While skywatchers marvelled, the country’s energy and insurance sectors were on quiet alert. The same charged particles that painted the sky can induce geomagnetically-generated currents capable of damaging transformers, disabling satellites and interrupting communications.

Transpower temporarily took several South Island transmission lines offline on Wednesday as a precaution. By Thursday morning, the national grid operator lifted its grid emergency, reporting no consumer outages and confirming equipment was undamaged.

“This kind of action is standard when space weather reaches a particular level,” Transpower said, noting its preparedness programme developed with the University of Otago and international space-weather agencies.

The National Emergency Management Agency recently ran a solar-storm response exercise in the Beehive’s bunker — part of growing government awareness that space weather poses systemic, cross-sector risk.


Insurance turns its eyes to the sun

Globally, insurers are re-evaluating how solar storms could cascade through modern infrastructure. Lloyd’s of London has modelled a severe event that could inflict US $2.4 trillion (about NZ $4.1 trillion) in global economic losses over five years. The majority of that damage would come from long-duration power outages and equipment replacement costs.

“The insurance industry is well equipped to help businesses prepare for future solar storms,” Lloyd’s has stated, urging underwriters to draw on catastrophe-risk experience and offer clients preventative guidance.

“Solar storms must be a monitored emerging risk,” the International Insurance Society has warned, suggesting the next phase may include dedicated solar-storm catastrophe bonds and derivative covers.

In New Zealand, where the grid is heavily centralised and reliant on long transmission corridors, such modelling is not hypothetical. Reinsurers say a severe geomagnetic disturbance could create widespread contingent-business-interruption losses — even if physical damage were limited. A storm in 1859 dubbed the Carrington Event saw telegraph wires burst into flame.


Learning from the near miss

For now, the lights have faded and the lights have stayed on. But scientists say we are near the peak of Solar Cycle 25, expected to remain volatile through 2026. Two “massive” coronal mass ejections were detected earlier this month — and more are likely.

“Given the strength of this storm, there’s a chance people farther north than typically expected in the southern hemisphere might be able to see it,” said Dr Laura Driessen of the Sydney Institute for Astronomy.

For Kiwi insurers and risk managers, that also means a chance to test readiness. The same forces that thrill photographers could, in a stronger event, darken the grid — and challenge underwriting assumptions about what counts as an “earthly” peril.

Until then, New Zealanders will keep their cameras handy, their batteries charged, and their eyes on a sky that — for one unforgettable night — turned red with both beauty and warning.

The Carrington Event: the solar storm that lit the world on fire

Long before satellites, smartphones, or global power grids, Earth experienced the most powerful solar storm in recorded history. It began on 1 September 1859, when British astronomer Richard Carrington observed an intense flash of light on the surface of the sun — a solar flare unlike anything previously documented.

Within hours, a massive coronal mass ejection (CME) struck Earth’s magnetic field. The impact triggered brilliant auroras visible as far south as the Caribbean and as far north as Queensland. Newspapers from the era described skies “as bright as day” and “readable by auroral light.”

But the spectacle came at a cost. The electrical currents induced by the storm set telegraph systems ablaze across Europe and North America. Operators received electric shocks through their keys; some were able to transmit messages even after disconnecting power, as the solar-charged atmosphere carried its own current.

In today’s interconnected world, a storm of similar strength could have far greater consequences. Modern satellites, navigation systems, aviation networks, and power grids all rely on electronics vulnerable to geomagnetically induced currents.

Lloyd’s of London and NASA scientists estimate that a Carrington-scale storm today could cause global economic losses in the trillions, disabling communications and power systems for weeks or months.

The “Carrington Event” remains the benchmark for extreme space-weather scenarios — and a sobering reminder that the same forces that light the heavens can also bring modern infrastructure to its knees.

Keep up with the latest news and events

Join our mailing list, it’s free!