Global re/insurance broker Aon has launched its Climate Risk Monitor, a tool to help clients visualize and understand their exposures to physical climate risk for better business decisions.
Aon’s Climate Hub in Singapore developed the Climate Risk Monitor in collaboration with the firm’s global reinsurance analytics experts.
This tool launches as the property insurance market is increasingly influenced by climate-related perils, with a reported $112 billion of insured losses caused by weather-related catastrophes in 2023.
Aon’s Climate Risk Monitor assesses an organization’s current and future exposures to key chronic risks including drought, extreme rainfall, extreme heat, freeze and wildfire under different climate change scenarios and subsequently provides diagnostic reports on individual asset, portfolio impact and geographical visualizations.
It also allows clients to assess evolving risk profiles and manage risk in locations with projected changes while assisting them to demonstrate climate understanding and planning to stakeholders, and supporting their climate disclosures.
Aon says that it will allow risk managers to better understand climate risk and in turn inform property insurance placements for their organizations, collaborating with Aon’s brokers to help obtain optimal limits and renewals pricing.
Climate Risk Monitor can also help to better inform insurers’ risk selection and strategies around pricing and reinsurance renewals.
Trough the monitor, Aon aims to expand existing solutions that help clients assess and manage natural catastrophe risk, including the firm’s Impact Forecasting suite of global catastrophe models; experts in enterprise risk management, engineering, casualty and transition risk; and 14 global academic collaborations.
Liz Henderson, Global Head, Climate Risk Advisory, Aon, commented, “In developing Climate Risk Monitor, we utilized 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.”
The broker added that the tool uses standard IPCC (SSP-RCP) emissions scenarios over multiple time horizons to align with regulatory requirements. 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 to produce relevant peril metrics.
