arXiv:2611.13909v1 Announce Type: cross Abstract: Modern power systems are becoming more renewable-rich, digitalized, and interconnected, making risk propagation and economic consequences increasingly complex. Physical mitigation remains the primary means of risk control, but technical and economic limits leave residual risk. Insurance can complement these measures by transferring associated economic losses and influencing power-system decisions through risk-responsive terms. Despite growing interest, the literature remains fragmented across power-system engineering, actuarial science, and risk finance. This review develops an integrated physical-financial perspective for reviewing insurance in power systems. It examines how power system risks generate residual economic losses and the conditions under which these losses can be insured and transferred. It then develops an actuarial framework for insured-loss assessment and pricing. Insurance-aware decision-making is synthesized through four coupling levels describing how financial protection interacts with power-system decisions. Further progress is constrained by weak physical-financial loss validation, incomplete representation of systemic and evolving portfolio risk, and limited empirical and actuarial grounding of insurance-decision feedback. Research priorities include stronger physical-financial data linkage, forward-looking portfolio assessment, multi-timescale decision feedback, and empirical validation. Addressing these priorities would help move power-system insurance from fragmented applications toward a more coherent approach to residual-risk management in future power systems.