Aon is incorporating research from Columbia University and other academic institutions into its tropical cyclone, wildfire and windstorm models to better assess future financial losses. 

Aon’s Impact Forecasting team will rebuild its catastrophe modelling suite to incorporate the climate projections, rather than adjusting to existing loss scenarios.  

“These models will enable forward-looking hazard data for different climate scenarios and inform climate advisory frameworks to help insurers make better business decisions,” Aon said.  

Fourteen global academic collaborations are bringing the emerging climate research to the insurance industry, Aon says, helping transition to net zero and identify growth opportunities.  

The collaborations can benefit corporations with climate risk exposures, particularly in addressing increasing regulatory mandates related to Environmental, Social and Governance (ESG). 

“We are assisting clients to meet their ESG mandates through the development of effective and informed internal and external stakeholder communications strategies, including robust responses to regulatory disclosure requirements,” Aon said. 

Under some scenarios, US hurricane losses would increase by at least 10% over 20 years as a result of climate activity change, the Columbia University researchers found.  They explored different ways to quantify moisture in the air and assessed the impact of varying levels of future greenhouse gases and aerosols. 

Other peril-specific academic insights being built into Aon’s models include collaboration with the University of California examining how significantly increased US fire risk in many areas will affect the burned area and associated insured loss in wildfire events. 

The Karlsruhe Institute of Technology (KIT) found that extreme hydrological events strongly depend on catchment size and physical features of the terrain. 

“Through collaborations with academic institutions, Aon is enhancing its understanding of climate science and using this knowledge to help our clients and the wider industry navigate climate change, become more resilient, seize new opportunities and make better risk decisions,” Aon’s Climate Risk Advisory team Leader Liz Henderson said.