In Aon’s 2024 Climate and Catastrophe Insight report, CEO Greg Case emphasises that climate risk is not a mere probability but a certainty that demands urgent attention.
Reflecting on the severe weather events that transpired in 2023, including wildfires, floods, and record-breaking heatwaves, Case asserts that these events pose an existential threat to our way of life.
The report reveals that out of the 66 natural catastrophes causing a billion dollars or more in damages in 2023, a staggering 63 were weather-related.
Shockingly, only 40% of these weather and climate-related losses were covered by insurance.
Case sees this as a substantial opportunity to bridge the protection gap, offering tangible value to clients and bolstering the insurance industry’s impact on society’s response to climate risks.
Identifying climate challenges as present-day issues rather than distant future problems, Case calls upon organisations to proactively prepare for climate risks to enhance the resilience of their operations, workforces, and the communities they influence.
The report highlights three catalysts recommended by Aon to expedite clients’ ability to address climate risks. Aon emphasizes the significance of predictive analytics, which go beyond traditional catastrophe models by leveraging forward-looking climate risk models.
These models quantify how climate change impacts the frequency and severity of rare but costly events. Aon’s integration of over 1,000 analytics professionals provides clients with an integrated view of market dynamics, enabling a better understanding of current and future risks. Climate analytics also offer clarity for the voluntary carbon market and support the energy transition through innovation.
Acknowledging the complexity of climate risk, Case stresses the importance of collaboration among businesses, governments, and the scientific community.
Aon has recently become the first member with Risk Capital capabilities to join the International Emissions Trading Association, aiming to build an international framework for trading greenhouse gas emission reductions.
The company also collaborates with clients across reinsurance and commercial risk sectors to quantify and mitigate their unique risks and facilitate a transition to a low-carbon future.
Case emphasises the pivotal role of innovation in achieving a net-zero economy. Aon has committed to achieving net-zero greenhouse gas emissions by 2030.
To accelerate the path to net zero, an estimated $150 trillion in capital must be deployed over the next 30 years. Aon sees the insurance industry as a key player in unlocking and expediting the flow of capital into green investments and volatility management through innovative risk transfer programs.
