Willis has announced a new scientific partnership with researchers at Cornell University and the Cornell Atkinson Centre for Sustainability to identify evolving threats from correlated natural catastrophes.

The research, funded by WTW through an initial one-year funding agreement, aims to offer insurers and reinsurers new insights into the synchrony of major perils and its potential effects on the industry’s collective exposure to catastrophic losses.

The insurance sector relies on geographic diversification to reduce its collective exposure to natural catastrophes – such as tropical cyclones, wildfires, and severe convective storms – assuming that major catastrophes are not likely to occur in the same year in different parts of the world. Historically, peril-to-peril correlations have been weak, and statistical models do not generally justify holding additional capital to guard against the possibility of multiple, synchronised catastrophic events.

Through the collaboration, experts at Cornell and Willis will examine whether major perils have already become more correlated in the present day and model the expected evolution of correlated catastrophes over the next one to five years.

Scott St. George, head of weather and climate research for the Willis Research Network, said: “In a changing world, we can’t afford to look only in the rearview mirror. Geographic diversification has served the insurance industry well in the past, but if catastrophes become more correlated, that strategy will no longer be valid. Our partners at Cornell will help us determine the true risk of correlated catastrophes in the present day and get prepared for the possibility of greater synchrony in the near future.”

Toby Ault, associate professor in the Department of Earth and Atmospheric Sciences at Cornell University, added: “Our research has shown that to accurately assess correlated risks in a changing climate, one needs to account for the chaotic nature of weather through large ensemble simulations and physics-informed statistical analysis. By combining our expertise in drought research, climate variability, and hurricane risk with WTW’s industry knowledge, we can better prepare for the complex climate risks of the future.”

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