Flux

At Aon, a key priority is developing more predictive models for “secondary perils” such as severe convective storms, winter storms, and wildfires, says Megan Hart, a managing director at the firm. “The models haven’t been mature for those perils, because so much focus has been placed on hurricanes and earthquakes,” she says.

Still, some analysts express skepticism, partly because there is no historical precedent with large-enough sample sizes of data to feed into the computers. “Actuarial science is very good at using the past to predict the broadly similar future. It’s much less good at predictions in a period of flux,” says Meyer Shields, an analyst at Keefe, Bruyette & Woods.
–Barron’s