The understanding of how climate change can affect perils such as hurricanes, floods and storms is vital for insurers – and developments by Aon have been crucial to quantifying those impacts.

The broker's catastrophe model development division, Impact Forecasting, has been using the latest research and collaborations with academia to incorporate science-based climate insights into its cat models.

These models enable users to quantify the effects of climate change for different emissions scenarios and time horizons. This in turn helps insurers make decisions about underwriting, reinsurance purchasing, new product development, accumulation control and strategic decision making.

Aon's Impact Forecasting team is incorporating climate change into its US hurricane, German flood, and European windstorm and severe convective storm models, among others.

In the case of the US hurricane models, the team is working with Columbia University on implementing a climate-conditioned event set into a US hurricane model framework, using Impact Forecasting's ELEMENTS platform. This work builds on the first phase of the project, in which the university produced 'climate deltas' – changes in frequency for a variety of coastal regions and different categories – which were used to adjust frequencies in event loss tables.

For German flood, Impact Forecasting is working with the Karlsruhe Institute of Technology to produce a physical view of flood risk based on both current-climate and climate change.

The team has some experience on climate/flood models. In 2021, it published the first climate change impact assessment solution for flood in Central Europe. This solution was implemented in the new flood models for the Czech Republic , Poland and Slovakia. It allows for a fully probabilistic solution, based on 12,066 synthetic years, that accounts for the introduction of adaptation measures, such as the building of flood defences.

The judges welcomed the decision to publish an academic paper on this approach, in a peer-reviewed journal, and commended Aon for its transparency and its commitment to reflect the latest science in its climate modelling.