Aon-Columbia University Collaboration Warns Climate Models May Underestimate Future Impacts of Atlantic Hurricanes and U.S. Severe Storms

Aon-Columbia University Collaboration Warns Climate Models May Underestimate Future Impacts of Atlantic Hurricanes and U.S. Severe Storms

Academic collaboration renewed until 2027 to pursue research on the correlation of climate risk across perils and regions

LONDON, August 6, 2024 - Aon plc (NYSE: AON), a leading global professional services firm, today announced the renewal of its research collaboration with Columbia University, one of the world's most important centers of research, including for the study of weather and climate science.

The collaboration, which will continue to explore ways to better quantify the uncertainty of climate change impacts on tropical cyclones, has been renewed until 2027 and augmented to include research on the correlation of climate risk across different perils and regions.

The renewal follows a successful first phase for the collaboration, which saw the integration of the latest Columbia peer-reviewed climate science into Aon's Impact Forecasting tropical cyclone catastrophe model suite. As a result, Impact Forecasting's Hurricane Model v3.0, released this year, includes additional climate change views with every stochastic run. Meanwhile, a peer-reviewed paper of the findings from the initial phase of the collaboration is scheduled to be published in the Journal of Catastrophe Risk and Resilience in August.

Patrick Kelly, Aon's head of Climate Analytics for North America, said: "Climate risk across geographies and perils is interconnected, and represents a significant area of uncertainty for the re/insurance industry. Aon and Columbia will continue to work together to understand how global climate factors influence multi-peril and multi-region losses. This research will help global organizations navigate volatility, build resilience and ultimately shape better business decisions."

Further first phase research outputs relevant to re/insurers include:

• Climate-attributed U.S. hurricane losses could increase by at least 10 percent over the next 20 years, but underlying uncertainty in loss projections reflect the overall scientific uncertainty of future hurricane frequency changes.

• The uncertainty around future loss projections motivates adoption of risk management and climate adaption strategies that are resilient to a wide range of possible outcomes.

• Aerosol concentrations are a key driver of Atlantic Ocean hurricane frequency, helping to explain past historical hurricane trends while also suggesting that future reduction of aerosols may lead to relatively more storms.

• Climate models appear to be incorrectly representing the pattern of warming in the Pacific Ocean in response to greenhouse gases, which could mean that near-term projections of severe weather - such as tropical cyclone activity in the North Atlantic Ocean and severe convective storms in the U.S. - are underestimated.

Phase two of the Aon-Columbia collaboration builds on the phase one work to further explore the implications of climate model biases on future tropical cyclone risk; for instance, the Columbia team has identified that the most recent suite of climate model simulations in the scientific community yields too much warming in the eastern Pacific Ocean in response to greenhouse gases.

This finding implies that model projections of tropical cyclone activity may be too active in the Pacific Ocean, and not active enough in the Atlantic Ocean. The new research will constrain and quantify this uncertainty, using improved climate model projections to understand the implications on tropical cyclone risk and projected losses in Aon's Impact Forecasting model.

For more information about Aon's Reinsurance Solutions, please visit: https://www.aon.com/home/solutions/reinsurance.html

Discover more on Aon's Impact Forecasting models: https://www.aon.com/en/capabilities/reinsurance/catastrophe-model-insight

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