For years, catastrophe models have helped insurers set prices and manage risks from severe weather events. But as storms grow stronger and losses go beyond past patterns, experts like Kim Roberts of Guy Carpenter say these models alone aren’t enough anymore.
Roberts, who leads North American peril at Guy Carpenter, explained that catastrophe models still hold valuable knowledge. However, they depend on historical data, and the future may look very different. After a sharp increase in losses in 2023, insurers and reinsurers had to take a hard look at how they evaluate risk.
That shake-up led to tighter insurance availability and higher prices. But as things have calmed down recently, reinsurers are stepping back into the market with more willingness to take on risk. New tools and approaches are also helping to fill the gaps left by traditional catastrophe models.
One big challenge lies in severe convective storms, or large thunderstorms, which have been tough to predict accurately. Roberts says insurers are getting smarter about managing their exposure by combining model data with other important details like roof materials and deductible structures. Guy Carpenter’s GCAT Severe Thunderstorm Risk Index is one tool that offers a fresh view on these risks.
Wildfires also remain tricky to model. Current models usually stop where wildlands meet urban areas and don’t fully capture how fire spreads through neighborhoods. Roberts points out that recent California wildfires highlighted this gap. Insurers are now focusing more on how buildings resist fire, taking steps like promoting defensible space and better roofing. Some are even working with wildfire mitigation companies to help homeowners prepare.
Looking forward to the upcoming 2026 reinsurance season, Roberts expects the market to be steadier. Reinsurers seem more open to covering tough risks like wildfires and severe storms—if insurers can show they have strong, data-backed strategies in place.
She stressed that relying only on catastrophe model results won’t cut it. Insurers must bring a full picture to the table — showing how they understand and manage risks, and how they’re helping clients build resilience.
In the end, catastrophe models remain a key part of risk assessment. But to keep up with changing threats, insurers need to blend those models with new data, tools, and insights. That’s the best way to handle risk in today’s unpredictable world.