Insurers Differ in Catastrophe Model Use, Aon Survey Finds

Aon has released its 2025 Catastrophe Risk Management Survey, revealing significant variation in how insurers adopt and implement catastrophe modeling tools for portfolio management, rate setting, and disaster response. The findings come amid the second-highest global first-half natural disaster claims on record, according to Aon's first half of 2025 Global Catastrophe Recap.

The survey found that 48 percent of insurers do not license catastrophe models, and only 27 percent maintain dedicated model evaluation teams, potentially limiting their decision-making capabilities. More than 80 percent of participants said analytics are essential to risk management and reinsurance placement, though nearly 60 percent operate catastrophe risk teams of five or fewer people and rely heavily on their reinsurance brokers for analytical support.

Over 70 percent of respondents said models built on sound scientific and engineering principles are critical to underwriting, capital management, and reinsurance. Forty-four percent ranked the reasonableness of model methodology as their top licensing criterion.

Approaches vary by region. US insurers reported faster adoption timelines and lower concern about climate change effects, while those in the UK and EMEA favor slower implementation and greater consideration of climate impacts. Vendor preferences also differ by geography.

The survey also identified key concerns: 68 percent are improving data quality, focusing on property characteristics and location accuracy; respondents cited misalignment between modeled losses and actual claims; most rely on brokers for accumulation management tools; only 20 percent adjust their risk view for nonmodeled loss despite its ranking as a major concern; and 68 percent are seeking better integration of climate change impacts.

"In an increasingly complex and volatile global risk environment, our survey highlights the importance of re/insurers implementing a multi-model, risk-level catastrophe management strategy that incorporates the latest climate science," Katie Carter, head of View of Risk Advisory for Aon in the Americas, said. "It also reveals that risk management strategies vary regionally and must be considered when identifying appropriate risk transfer mechanisms to optimize utilization of capital."

Aon said its View of Risk Advisory and Impact Forecasting teams work with re/insurers to develop portfolio-specific risk perspectives, factoring in current and future climate impacts, to support decisions on risk transfer, capital allocation, and resilience strategies.