Greg Case, the CEO of Aon, a prominent global insurance broker, has emphasized the necessity for improved modeling of climate risks to alleviate strains within the property insurance sector. He noted that the market is facing significant challenges due to a surge in claims resulting from extreme weather events.
The affordability of home insurance has notably declined in regions like California and Australia, attributed to the escalation of storms, floods, and wildfires induced by global warming. Contributing to these issues is a reduction in support from reinsurers, whose contracts play a crucial role in the distribution of catastrophe-related payouts in the property insurance realm.
In an interview with the Financial Times, Case acknowledged the reality of these challenges. He expressed concerns regarding the ability to find insurers and investors willing to underwrite catastrophe risks at rates feasible for consumers, stating that the equilibrium in the market is currently under strain.
Case emphasized the importance of advancing analytical models to better understand and assess the risks associated with severe weather events. He advocated for the development of forward-looking models that can enhance risk comprehension and facilitate improved insurance supply.
Traditionally, the industry has relied on historical data to predict future outcomes, a methodology Case deemed insufficient in addressing climate-related risks, as well as risks associated with cyber threats and generative AI.
Despite the current challenges, Case expressed confidence in the sector’s ability to adapt and evolve. He emphasized the need for broader participation of insurance capital, including contributions from pension funds and sovereign wealth funds, facilitated by the growing insurance-linked securities market.
Additionally, Case highlighted the significance of artificial intelligence as both a substantial risk and an opportunity for innovation within the global business landscape. He underscored the implications of AI across various sectors, including copyright disputes and cybersecurity threats.
Amid technological advancements and workforce disruptions exacerbated by the pandemic, Case noted that Aon’s commercial clients and their employees are facing unprecedented levels of volatility. He emphasized the escalating trends in risk and volatility over the past 15 years, signaling the necessity for proactive risk management strategies.
Aon, with a market value of $65 billion and a presence in 120 countries, plays a pivotal role in advising companies on risk management and insurance solutions. In December, the company finalized a $13 billion acquisition of US broker NFP, further expanding its services for mid-sized companies.
