Aon unveils new tool to improve risk management, renewal strategies
Global brokerage Aon has launched a new climate risk monitoring tool that it believes can help better inform insurers’ risk selection, and strategies around pricing and reinsurance renewals.
Aon’s Climate Risk Monitor allows clients to visualise and understand their exposures to physical climate risk in order to enable better business decisions and inform their risk transfer strategies.
The property insurance market is increasingly influenced by climate-related perils, with $112 billion of insured losses caused by weather-related catastrophes in 2023, Aon cited.
The new tool assesses an organisation’s current and future exposures to key chronic risks – drought, extreme rainfall, extreme heat, freeze and wildfire – under different climate change scenarios, providing diagnostic reports on individual asset and portfolio impact, as well as geographical visualisations.
Risk managers can use this data to better understand climate risk and in turn inform property insurance placements for their organisations, collaborating with Aon’s brokers to help obtain optimal limits and renewals pricing, the broker explained.
Liz Henderson, global head of Climate Risk Advisory for Aon, said: “In developing Climate Risk Monitor, we utilised our wide-ranging scientific and business expertise to transform a wealth of well-validated climate data into useful information for clients. The importance of this output extends beyond physical risk management – having a better understanding of climate exposures can also assist with human capital decisions around health and talent.”
Aon’s new Climate Hub in Singapore develop Climate Risk Monitor in collaboration with the firm’s global reinsurance analytics experts. Supported by the Singapore Economic Development Board, the Hub helps Aon’s global clients to navigate environmental risk and opportunities.
The tool uses standard IPCC (SSP-RCP) emissions scenarios over multiple time horizons to align with regulatory requirements. To produce relevant peril metrics, Aon leverages a range of global climate model outputs from different global academic and government institutions, as part of the Coupled Model Intercomparison Project Phase 6, whose results are used in IPCC assessment reports.
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