Willis, a global insurance broker and risk advisory firm, has announced a new scientific collaboration with researchers at Cornell University and the Atkinson Center for a Sustainable Future.
The partnership, introduced by Willis, is focused on identifying emerging risks linked to correlated natural catastrophes. Supported by an initial one-year funding agreement, the research is intended to provide insurers and reinsurers with a clearer understanding of how major perils may occur at the same time and what this could mean for the sector’s overall exposure to significant losses.
Willis states that natural catastrophes remain a major source of claims for insurers and reinsurers, prompting continued monitoring of patterns across events such as tropical cyclones, wildfires and severe convective storms.
The industry has traditionally relied on geographic diversification to limit exposure, based on the assumption that major events are unlikely to occur in different regions within the same year. Willis notes that, historically, correlations between different perils have been limited, and existing models have not generally justified holding additional capital to protect against multiple large-scale events happening simultaneously.
Willis indicates that this assumption may not hold in future as the climate changes. The company explains that it is not yet fully understood how evolving climate conditions could affect relationships between different types of natural hazards.
Through this collaboration, Willis and Cornell researchers will assess whether correlations between major perils are already increasing and will model how these relationships may develop over the next one to five years. The research at Cornell will be supported by the Atkinson Center for Sustainability and conducted by Dr. Jonathan Lin, Dr. Toby Ault and Dr. Flavio Lehner within the university’s Department of Earth and Atmospheric Sciences.
Scott St. George, Head of Weather and Climate Research for the Willis Research Network, commented: “In a changing world, we can’t afford to look only in the rearview mirror. Geographic diversification has served the insurance industry well in the past, but if catastrophes become more correlated, that strategy will no longer be valid. Our partners at Cornell will help us determine the true risk of correlated catastrophes in the present day and get prepared for the possibility of greater synchrony in the near future.”
Cameron Rye, Director of Natural Catastrophe Analytics for Willis Re, said: “Understanding how multiple natural perils may align in a warming world is becoming increasingly important for reinsurers, who have traditionally modelled the risk from different perils independently. By combining Cornell’s cutting edge research with Willis’s deep industry experience, we can give our clients clearer visibility into evolving catastrophe risks and support more resilient decision making.”
From Cornell University, Prof. Toby Ault, Associate Professor in the Department of Earth and Atmospheric Sciences, added: “We’re excited to work with WTW to translate cutting-edge climate and atmospheric science into actionable insights for the insurance industry.
“Our research has shown that to accurately assess correlated risks in a changing climate, one needs to account for the chaotic nature of weather through large ensemble simulations and physics-informed statistical analysis. By combining our expertise in drought research, climate variability, and hurricane risk with WTW’s industry knowledge, we can better prepare for the complex climate risks of the future.”
