Aon and ICEYE join forces to revolutionise flood and wildfire risk analytics
Aon earlier this month announced a strategic partnership with ICEYE that gives the broking giant ground-breaking access to the satellite operator’s cutting-edge flood and wildfire data.
The collaboration promises to enhance Aon's response capabilities for global flood insights and wildfire assessments across the US, bolstering the industry’s ability to tackle unpredictable natural catastrophes.
In a joint interview during the Rendez-Vous in Monte Carlo earlier this month, Dan Dick, head of catastrophe analytics at Aon, emphasised the importance of this partnership: "When it comes to perils like floods and wildfires, we realised we didn't have the speed or accuracy we needed to truly benefit our clients. ICEYE’s technology changes that, allowing us to gain real-time insights and turn that into value."
Stephen Lathrope, senior vice president for solutions at ICEYE, echoed the enthusiasm, highlighting the firm’s global satellite network: "With 40 satellites orbiting the earth, we monitor weather patterns, predict where floods might occur, and provide precise flood depth data using radar imagery – even through smoke or clouds. This partnership with Aon extends our ability to deliver actionable insights worldwide.”
The collaboration also marks a significant step forward in parametric insurance solutions. Dick noted that the granular data provided by ICEYE is critical for building-level insights, which will support the growing parametric insurance market. "Having confidence in the data used to trigger parametric solutions is essential, and ICEYE provides the level of precision that gives us and our clients that confidence."
As natural disasters, particularly in non-traditional regions, continue to disrupt global markets, the Aon-ICEYE partnership aims to provide more accurate risk assessments. Lathrope pointed to recent unpredictable flood events in Brazil and Dubai, highlighting the unique ability of ICEYE’s satellites to capture these unexpected disasters in real-time.
"It’s not just about frequency and severity, but where these events happen," he remarked. "Our data covers even the most unexpected locations, helping Aon respond faster and more effectively."
This breakthrough in satellite data will enhance not only emergency responses but also help insurers better understand secondary perils and manage retained risks. Both companies expressed optimism about the future of this collaboration, signalling that it could reshape the way the insurance industry tackles catastrophe risk moving forward.
Parametric solutions: A new frontier in risk transfer
As parametric insurance continues to gain traction, the collaboration between Aon and ICEYE could significantly boost the scale and application of this innovative solution.
Parametric insurance – which offers pre-agreed payouts based on specific triggers, such as rainfall levels or wind speeds – has seen increasing adoption not just in reinsurance and ILS, but also in traditional insurance markets.
Dick highlighted the growing importance of parametric solutions in the context of this partnership: “We’re seeing parametrics used more and more, not just in reinsurance transactions but even by primary insurers purchasing traditional coverage,” he noted.
The key, he explained, lies in the accuracy and reliability of the data that determines the trigger.
"To really have confidence in parametrics, you have to understand how the event is going to be measured, and you need trust in the entity providing that data. For floods, we’ve never had anything at the building level like what ICEYE now offers. This partnership provides the precision we need to structure parametric products with confidence."
By capturing detailed, location-specific information, ICEYE enables insurers to offer parametric coverage that’s tailored to specific communities and businesses, delivering rapid payouts when certain thresholds are met.
Lathrope underscored the transformative potential of parametrics in underserved regions and non-traditional insurance markets.
“The unique opportunity with parametric coverage is that it can provide protection for communities and businesses in areas where traditional insurance is less prevalent or inaccessible," he said.
"What we can do, with our rapid satellite observations, is deliver critical insights to trigger parametric payouts quickly. Whether it’s a community in Lagos, Ghana, or even in New York City, our data can support rapid financial response to disasters.”
This precision and speed make parametric solutions particularly valuable in managing secondary peril risks – events that, while not as headline-grabbing as major hurricanes or earthquakes, still cause significant damage and disruption.
Dick pointed out that parametrics are ideal for helping insurers manage these risks more effectively, especially as non-traditional catastrophe events, like flash floods in Dubai, become more common.
The partnership’s ability to enhance parametric models could also help close the “protection gap" – the difference between insured losses and total economic losses – by extending coverage to previously underserved communities or areas with less frequent but still devastating natural disasters.
Lathrope emphasised that parametrics are not just for emerging markets: "We’re working with communities around the world, from Nigeria to New York City, delivering real-time, precise data that can unlock parametric solutions for populations that have traditionally been underserved by the insurance market."