Aon unveils cat model for severe convective storms

Aon PLC Monday said it has launched its latest catastrophe model for severe convective storms in the United States.

The model, developed by Aon’s Impact Forecasting team, reflects a higher frequency of $1 billion to $5 billion industry loss events, smaller events that do not appear in the historical record, and “realistic” tail losses from derechos and other significant SCS hazards, Aon said.

A complete 20-year historical event set is also available to allow companies to validate modeled industry losses, analyze historical events based on their current portfolios for better reinsurance decision-making and compare modeled historical losses to claims.

The enhanced SCS gives users alignment with recent historical loss experience across both industry and client portfolios; average annual loss and low return period aggregate loss estimates that more accurately represent trended client experience; and full capture of all SCS sub-perils and appropriate geographic distribution in modeling, the broker said.

Severe convective storms have become increasingly costly for insurers and reinsurers and accounted for more than 60% of global natural catastrophe losses in the first half of the year, Aon said.

U.S. SCS insured losses in 2023 totaled more than $58 billion and reached $70 billion of insured loss globally, according to Aon’s 2024 Climate and Catastrophe Insight report.

“Another historic year for SCS-related losses again highlights the need for an improved understanding of SCS loss drivers,” Eric Robinson, global SCS model development lead for Impact Forecasting, said in the statement.