Aon survey highlights critical gaps in cat model use among re/insurers

Findings from a new survey released by broker Aon has highlighted a significant gap in catastrophe model utilisation, which can ultimately impact how re/insurers assess risk, structure capital and respond to disaster scenarios.

The company recently released its 2025 Catastrophe Risk Management Survey, gathering responses from senior insurance and reinsurance executives on how catastrophe modelling tools are used across critical processes such as portfolio management, pricing, and responding to natural disasters.

The publication of the survey follows Aon’s Global Catastrophe Recap report for the first half of 2025, where the broker estimated that insured losses from catastrophe events across the globe during the period had increased to at least $100 billion, marking the second highest recorded after 2011’s $140 billion.

Aon’s report emphasised how the escalating cost of natural disasters is reinforcing the need for robust modelling capabilities within the re/insurance industry.

According to the broker’s findings, nearly half of the insurers surveyed (48%) do not currently license catastrophe models, while only 27% have dedicated teams to evaluate the models they use.

As mentioned, this showcases a significant gap in cat model utilisation. Without widespread use and deep understanding of catastrophe models, this is likely to impact how insurers assess risks, and the capital they allocate.

Moreover, the broker also noted that most insurers increasingly recognise the value of analytics in their operations.

Over 80% of respondents consider analytics critical to both risk management and reinsurance placement.

However, findings show that nearly 60% of these companies operate with catastrophe risk teams of five or fewer people, and rely heavily on the expertise of their reinsurance brokers to provide analytical insight, enabling insurers to interpret models more effectively, manage their portfolios, and respond rapidly when disasters occur.

Aon’s survey also showed support for models grounded in scientific and engineering rigor, with more than 70% of respondents revealing that these particular foundations are essential when applying models to their underwriting, capital management, and reinsurance strategies.

As well as this, the broker highlighted regional variation in how insurers approach catastrophe risk.

An example provided by Aon, shows that US-based companies tend to adopt new catastrophe models more quickly and with less emphasis on climate change impacts, while insurers in the UK and across the EMEA region tend to take a slower approach to adoption while giving more consideration to climate-related impacts.

Furthermore, Aon also revealed that it identified a variety of common concerns facing insurers.

As per the broker, data quality was frequently cited, with 68% of participants indicating they are actively working to improve property data and location accuracy.

Concerns around model transparency were also flagged prominently, with insurers pointing to instances where projected losses did not align with actual claims experience.

Climate risk emerged as another key challenge, with 68% of participants indicating that they are seeking better methods for incorporating climate change into their modelling and risk planning.

“In an increasingly complex and volatile global risk environment, our survey highlights the importance of re/insurers implementing a multi-model, risk-level catastrophe management strategy that incorporates the latest climate science,” commented Katie Carter, Head of View of Risk Advisory for Aon in the Americas.

Adding: “It also reveals that risk management strategies vary regionally and must be considered when identifying appropriate risk transfer mechanisms to optimise utilisation of capital. Taking such steps can lead to better business decisions, and a generally more robust global re/insurance industry.”