Willis, a WTW business, unveiled a new version of its Climate Diagnostic model to help risk managers better understand and respond to climate‑driven volatility affecting property insurance markets.
Embedded within WTW’s Risk IQ platform, Climate Diagnostic is a climate risk technology capable of predicting the current and future impact of floods, windstorms and other material climate threats on an organization’s assets, business activities and supply chain.
As extreme weather events become more severe and frequent, insurers worldwide are responding either by increasing the cost of property insurance or withdrawing from vulnerable regions entirely. With the costs of protection predicted to keep rising with climate risks and in some regions become increasingly unsustainable, the implications for individuals, businesses and economies will be long-lasting.
In order to help address this growing protection gap, Willis has embedded Climate Diagnostic into its broking workflows and risk engineering surveys. The enhanced analytics tool enables brokers and risk managers to identify and quantify the impact of acute climate hazards, such as extreme flooding or windstorm risk, on global assets and business interruption under the current and future climates.
“The volatility and frequency of climate hazards are increasing. Embedding Climate Diagnostic in broking workflows and engineering surveys sets a new industry standard, with clients benefiting from a built-in scan of the risk against ongoing climate change volatility,” according to Peter Carter, head of Climate Practice at Willis, in a statement.
Climate Diagnostic conducts scenario-based assessments across an organization’s portfolio to identify current and future physical risk exposure to insurable climate-related perils, stress testing risk management and finance strategies in the short, medium and longer term. With this forward-looking approach, risk managers can incorporate safety measures into their risk transfer strategies that allow for rising climate volatility and explore alternative risk management methods, such as physical adaptation or alternative risk transfer solutions.
Climate Diagnostic also estimates the value of a portfolio exposed to levels of extreme weather risk and longer-term shifts in climate patterns. This supports the stress testing of current risk financing and risk transfer strategies amidst increasing climate volatility.
“Early sighting of assets exposed to climate-related perils gives risk managers the chance to build resilience, improving future insurability before disaster strikes,” Carter said.
Key features of Climate Diagnostic include:
- Interactive climatic and exposure maps to view highest risk areas – or physical asset portfolio exposures – for a selection of climate risks for given climate scenarios and time horizons, locate individual assets and identify financial exposure to each hazard.
- It is designed to be embedded in property broking and engineering workflows, helping clients consider climate volatility in risk management decisions.
- Climate Diagnostic data is scientifically sound, providing an independent forward-looking lens of insurable perils to clients.
Topics
InsurTech
Tech
New Markets
Property
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