Updated Climate Change Risk Models Are Giving Insureds And Underwriters A Better Chance To Defend And Restore Property
As it builds out a framework to model future climate risk, AIR Worldwide made changes last year to its hurricane and U.S. wildfire models with the goal of providing insurers and their clients with more accurate assessments of those morphing risks.
The catastrophe (CAT) modeling firm described in detail last June its longer-term project, which began three years ago and blends its ‘traditional hybrid, physical, and statistical approaches with a new set of tools that come from the world of artificial intelligence — specifically machine learning.’ AIR anticipates the new framework will provide insight into ‘not only today’s new climate questions, but also tomorrow’s.’
There is ‘huge demand’ from insurers and across industries to quantify the impact of climate change in the near, medium and long term, according to Liz Henderson, senior managing director of analytics at Aon.
A disconnect remains, however, between what CAT models can provide and what regulators are asking companies to understand about the impact of climate change on their finances.