Aon partners with University of California on wildfire modeling

Global broker  Aon has unveiled a new collaboration between its Impact Forecasting team, the University of California, Merced and the University of California, Los Angeles to improve wildfire catastrophe modeling by leveraging latest climate change science and research in this area.

The collaboration includes research from some of the top wildfire researchers in the US, including principal investigator John Abatzoglou (UC Merced), and Park Williams (UCLA) and Daniel Swain (UCLA).

It aims to support the development of climate-conditioned fire danger indices through research on changes to future fire weather behaviour in the US while implementing data from CMIP6 – the latest global climate model output as seen in the IPCC’s Sixth Assessment Report.

These indices will serve as inputs to drive the creation of climate-conditioned wildfire event catalogues, which are considered a required metric for properly incorporating climate science into a catastrophe modeling framework, Aon said. The climate conditioned catalogues, along with Impact Forecasting’s updated baseline wildfire risk model, are scheduled to be released in 2023.

The new fire danger indices and baseline / climate-conditioned wildfire catastrophe models for the US with help re/insurers better quantify the impact of the changing physical hazard on their portfolios and build resilience through investigating ways to manage risks and identify opportunities to more effectively prepare.

The need to better model the peril comes at a time when the insurance industry continues to navigate increased wildfire losses, the broker explained. In 2021, California’s Dixie and Caldor fires combined to exceed $2 billion in insured losses, and the Marshall Fire near Boulder, CO became the state’s most destructive fire on record, resulting in another $2 billion of insured losses. The US has recorded 14 individual billion-dollar insured losses fires since 2015 alone.

Dan Dick, Aon's global head of property analytics, said: “Wildfire had long been considered a ‘secondary’ peril – where frequency rather than severity drove overall risk – but over the past decade a significant increase in volatility and insured losses in the U.S. has changed this perception. The insights from this collaboration and Impact Forecasting’s baseline and climate-conditioned wildfire models will help re/insurers make better decisions on underwriting, pricing and portfolio management.”

Abatzoglou added: “This is a great example of how private industry and academia can learn from, and improve, each other’s work. Our industry partners get to leverage the latest and most up-to-date science, and we get the experience of translating our academic findings into real-world applications that directly affect decision-makers and the general public.”

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