Climate change is causing more disasters like floods and fires, which are hitting homes and businesses hard around the world. To better prepare for these risks, insurers are turning to new “future modeling” tools. These tools use data and artificial intelligence to predict what climate risks might look like decades from now. They help insurance brokers and their clients understand and manage potential dangers to property and business.
Big insurance companies like Allianz, FM Global, Swiss Re, Munich Re, and AXA XL have all developed their own versions of this technology. For example, Allianz recently introduced its Climate Adaptation & Resilience Services (CAReS) platform. This digital tool lets clients check climate risks at different locations and time periods, covering 12 different hazards. Allianz says the platform is easy to use and helps businesses see risks clearly, so they can make smart plans to protect themselves.
Other companies offer similar tools. FM Global’s Climate Change Impact Report highlights which spots are most vulnerable to things like heavy rain, strong winds, or heat waves. Swiss Re’s Climate Risk Solutions uses satellite data and machine learning to give a detailed look at potential risks up to the year 2100. Munich Re offers the NATHAN Risk Suite, which shows how natural disaster risks might change under future climate conditions. AXA XL’s Climate Risk Assessment tool combines global climate models with local data to help various industries understand their specific threats.
What sets these new tools apart from older ones is their all-in-one approach. Allianz, for instance, describes CAReS as a complete solution that looks not just at physical risks but also operational and financial concerns. These platforms usually come with expert advice but are also designed so that business leaders—not just scientists—can use them easily.
The data behind these tools comes from both public sources and private research. They use climate scenarios from groups like the Intergovernmental Panel on Climate Change (IPCC), along with proprietary models and detailed local maps. This mix helps create more precise and relevant risk assessments.
However, predicting the future climate is tricky. Allianz notes that these forecasts carry uncertainties, especially the farther into the future you look. This means it’s important for brokers to explain to clients that while the tools are powerful, their predictions aren’t guarantees.
There is growing interest in using these tools to protect global supply chains. Supply chain issues have become a hot topic since the pandemic and recent geopolitical struggles. Allianz’s latest Risk Barometer highlights that nearly half of businesses see supply chain disruption as a top concern, with some companies losing up to 20% in revenue due to such problems. Brokers who use advanced climate modeling can offer valuable services to help companies keep their operations running smoothly.
As climate risks continue to grow, insurers and brokers who embrace these new tools may be better equipped to protect their clients from financial losses and operational headaches in the years ahead.