Recent events in North America have changed the perception of wildfire as a secondary peril
Aon has announced a new collaboration between its Impact Forecasting team, the University of California to implement the latest climate change science and research into its US wildfire catastrophe model.
It will support the development of climate-conditioned fire danger indices through research on changes to future fire weather behavior in the US while implementing data from CMIP6 – the latest global climate model output as seen in the IPCC’s Sixth Assessment Report.
The need to better model the peril comes at a time when the insurance industry continues to navigate increased wildfire losses. In 2021, California’s Dixie and Caldor fires combined to exceed $2 billion in insured losses, and the Marshall Fire near Boulder, CO became the state’s most destructive fire on record, resulting in another $2 billion of insured losses.
The US has recorded 14 individual billion-dollar insured losses fires since 2015 alone.
Dan Dick, Aon’s global head of property analytics, said: “Wildfire had long been considered a ‘secondary’ peril – where frequency rather than severity drove overall risk – but over the past decade a significant increase in volatility and insured losses in the US has changed this perception.
”The insights from this collaboration and Impact Forecasting’s baseline and climate-conditioned wildfire models will help re/insurers make better decisions on underwriting, pricing and portfolio management.”