Aon has announced an expansion of its collaboration with Athenium Analytics to build enhanced modeling capabilities for severe convective storms (SCS) to better inform insurers as they tackle the growing losses associated with this peril.
While tropical cyclones remain the costliest peril for the insurance industry in the United States, triggering USD362 billion in insured losses since 1990, severe convective storms are a close second at USD330 billion. With the U.S. already recording at least 14 individual billion-dollar-insured SCS events through September of this year—including the Midwest Derecho on August 10 and several major tornadoes and hailstorms—it is more important than ever for insurers to enhance their analytical capabilities to better understand their impact from these costly storms.
Aon is collaborating with Athenium Analytics to fill SCS data gaps that insurers need to accurately price, underwrite portfolios and purchase reinsurance as a means to rethink access to capital when navigating volatility from this peril. Through this collaboration, the companies will provide:
- An updated catalog of historical event footprints for U.S. SCS, including its sub-perils of hail, straight-line winds and tornadoes. This will be available within Aon’s Impact Forecasting Severe Convective Storm catastrophe model to analyze specific scenarios, such as a repeat of April 2011’s Super Outbreak in the U.S., and present opportunities for improved underwriting and aggregation tools.
- A new hypothetical (stochastic) event set for Impact Forecasting’s updated SCS model to consider plausible events that have not recently occurred.
Liz Henderson, senior managing director for Aon’s Reinsurance Solutions business, explained: “Insurers recognize that SCS is a challenging peril to understand as historical data that has traditionally been relied upon tends to be biased towards population centers, hence underrepresenting the hazard in rural or growing communities. In addition, fraudulent claims can lead to an inflation of losses, making it difficult to quantify vulnerability. With these challenges, current tools often underestimate the true cost of the SCS peril. Our collaboration with Athenium Analytics will enable insurers to make more informed business decisions when managing this risk.”
Siamak Daneshvaran, global head of research & development for Aon’s Impact Forecasting team, added, “The collaboration between our teams will build upon synergies across hazard, technology and data to boost insurers’ understanding of severe convective storms. The better the historical data, the more robust the stochastic event set will be to create realistic average annual loss and probability curves to support underwriting and reinsurance buying.”
The program will leverage Athenium Analytics’ expertise in both natural and data sciences. “Our team of meteorologists, data scientists and engineers are equipped to create solutions allowing carriers to more accuracy and comprehensively evaluate SCS risk. The innovative data aggregation and normalization techniques we utilize across a range of various SCS datasets and sources will generate more actionable hazard insights, which are key for insurers to better navigate and adapt to future SCS risk,” said Jordan Foley, president at Athenium Analytics.
Aon is committed to helping clients leverage emerging technologies and new ways of working that advance their strategic initiatives. This offering is part of Aon’s technological evolution to deliver new products that meet clients’ needs today and tomorrow, in a transparent and efficient way, through innovative partnerships. More information is available at https://www.aon.com/reinsurance/specialty_practices/insurtech.jsp
This announcement follows Aon’s recent collaboration with Athenium Analytics to develop the Claims Signal™ Platform to identify high-risk claims.