Without effective natural catastrophe (Nat CAT) modelling, global insurers may be limiting their insights and ability to shape better business decisions according to the latest edition of Aon Catastrophe Risk Survey published in August 2025.
The survey spoke to senior industry leaders on their utilisation of modelling tools to inform processes including portfolio management, rate-setting and catastrophe response. According to Aon’s 1H 2025 Global Catastrophe Recap report, total insurance claims for global natural disasters were the second highest on record for a first half period, highlighting the importance of having access to effective modelling solutions.
Among its findings, the Survey revealed that 48% of insurers do not license catastrophe models, and only 27% have dedicated model evaluation teams, potentially limiting their insights and ultimately their ability to shape better business decisions. It also identified the following three key themes:
Analytics as a strategic imperative – More than 80% of survey participants indicated that analytics are integral to their risk management and reinsurance placement strategies, while nearly 60% operate with catastrophe risk teams of five or fewer people and rely heavily on the analytical expertise of their reinsurance brokers. This partnership was said to enable more effective model evaluation, portfolio management and rapid catastrophe response.
Confidence in science-backed catastrophe models – More than 70% of respondents cited the importance of models built on robust scientific and engineering principles for underwriting, capital management and reinsurance. Meanwhile, 44% ranked the reasonableness of model methodology as the most important criteria when choosing a model to license.
Regionalisation of catastrophe risk strategies – Risk management approaches are regionally tailored, with significant variation in preferred models, climate change considerations and model adoption rates. For example, US respondents favour faster adoption timelines and less concern for impacts of climate change, while respondents in the UK and EMEA favour slower adoption timelines and more consideration of climate impacts. Catastrophe model vendor preference also varies regionally.
The survey also highlighted the following top concerns among respondents:
- Data quality – 68% of the respondents use methods to improve data quality, with a focus on property characteristics and location accuracy.
- Model transparency – Concerns were expressed about the potential misalignment of modelled losses with actual claims experience.
- Accumulation management – Respondents most often rely on their reinsurance broker for tools to manage accumulation risk.
- Non-modelled loss – Non-modelled loss was cited as a top concern among respondents, and yet only 20% make adjustment to their view of risk to account for it.
- Climate risk – 68% were seeking improved methods to integrate climate change impacts.
Aon head of risk advisory in the Americas Katie Carter said, “Our survey highlights the importance of (re)insurers implementing a multi-model, risk-level catastrophe management strategy that incorporates the latest climate science. It also reveals that risk management strategies vary regionally and must be considered when identifying appropriate risk transfer mechanisms to optimize utilization of capital. Taking such steps can lead to better business decisions, and a generally more robust global re/insurance industry.”