Aon has released its 2025 Catastrophe Risk Management Survey, which gathered input from senior insurance executives on how they use catastrophe modeling tools in areas such as portfolio management, rate-setting, and disaster response planning.
The findings come as Aon reported that insurance claims from global natural disasters reached the second-highest total on record for a first-half period. The company said the result underscores the value of effective modeling solutions in managing exposure.
According to the survey, 48% of insurers do not license catastrophe models, and only 27% have dedicated teams to evaluate models. Aon said this may reduce the depth of insights available to insurers and limit their ability to inform business decisions.
More than 80% of respondents identified analytics as a key part of their risk management and reinsurance placement strategies. Nearly 60% reported operating catastrophe risk teams with five or fewer members, often relying heavily on their reinsurance brokers for model evaluation, portfolio oversight, and disaster response support.
Over 70% of respondents said they prioritize catastrophe models grounded in scientific and engineering principles for underwriting, capital management, and reinsurance purposes. In choosing which models to license, 44% cited the reasonableness of the methodology as their most important consideration.
In recent years, insurers have increasingly supplemented traditional catastrophe model outputs with additional datasets to gain a more nuanced view of risk, moving beyond “out-of-the-box” assumptions.
Industry experts also note that relying solely on standardized models can obscure location-specific or asset-level risk factors, which may leave critical exposures unaccounted for.
This has become more pressing as inflation and rising reconstruction costs widen valuation gaps, increasing the risk of underinsurance. Analysts also warn that these gaps – particularly in secondary perils – can lead to models underestimating actual liabilities, with potential financial impacts on both underwriting and claims management.
Aon’s survey also noted regional differences in catastrophe risk strategies. US respondents reported faster adoption timelines and lower concern over climate change impacts, while those in the UK and EMEA indicated slower adoption timelines and greater attention to climate factors. Vendor preferences also varied across regions.
Top concerns identified by respondents included data quality, with 68% implementing methods to improve accuracy in property characteristics and location data; model transparency, with some noting gaps between modeled losses and actual claims; and accumulation management, for which many depend on reinsurance broker tools.
Non-modeled loss was also a leading concern, though only 20% adjust their risk view to account for it. Climate risk was cited by 68% as an area where they sought better integration methods.
Katie Carter (pictured above), head of View of Risk Advisory for Aon in the Americas, said the results show the need for re/insurers to adopt multi-model catastrophe management strategies that incorporate current 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,” Carter said.
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