Insurers and brokers are turning to advanced climate modeling tools to better understand and manage risks from climate-driven disasters like fires and floods. These new tools use data and artificial intelligence to predict possible climate scenarios up to 50 years or more into the future, helping businesses protect their property and operations.
In July, Allianz introduced its Climate Adaptation & Resilience Services (CAReS), a digital platform that lets clients perform climate risk assessments on their assets and portfolios. It covers 12 different climate hazards and offers insights across various future timeframes. Other major insurers have also developed similar tools. For instance, FM Global launched the Climate Change Impact Report tool in 2023. This tool identifies specific locations at risk from climate threats like extreme rain and heat waves, providing practical advice to reduce those risks.
Swiss Re’s Climate Risk Solutions combines satellite data, machine learning, and climate science to create long-term risk profiles extending through 2100. Munich Re offers its NATHAN Risk Suite, which includes modules focused on climate change to show how natural disaster risks may change depending on different climate conditions. AXA XL also has a Climate Risk Assessment tool that mixes global climate models with local hazard data to help businesses in real estate and manufacturing plan for these threats.
Unlike traditional tools that mainly focused on mapping hazards or running basic scenario analyses, these newer platforms provide a more complete picture. Allianz describes CAReS as a tool that looks at the full range of climate risks — physical, operational, and financial — all in one place. These platforms often come with expert consulting but feature simple dashboards that business leaders can easily understand and act on.
The data behind these tools comes from various sources. Public data from the Intergovernmental Panel on Climate Change (IPCC) forms the base for many models, including those used by Allianz, Swiss Re, and Munich Re. These public scenarios outline possible futures based on different greenhouse gas emissions. For extreme weather events, companies often combine public data with their own detailed models to improve accuracy.
Still, these climate projections come with uncertainties, especially the further out they go. Allianz highlights the importance of communicating these limits clearly to clients. Predicting the future climate with total precision is impossible, and risks become harder to pinpoint over time.
There is growing interest in these tools from companies with global supply chains. Supply chain disruptions due to events like the COVID-19 pandemic and ongoing geopolitical issues have made understanding climate risk even more crucial. According to Allianz’s recent Risk Barometer, nearly half of businesses worldwide see supply chain disruption as a major concern for 2025. This creates new opportunities for brokers who can offer advanced climate risk insights to help protect their clients’ operations and profits.
As climate change continues to bring unpredictable challenges, these new modeling tools give insurers, brokers, and businesses valuable ways to plan ahead and build resilience.