Willis, a WTW business, has formed a scientific partnership with Cornell University and the Atkinson Center for Sustainable Future to examine how natural catastrophe risks could become more highly correlated in a warming climate.
The initial one-year program is intended to give insurers and reinsurers a clearer view of how multiple perils may align, challenging long-standing assumptions about diversification and capital needs.
The research, funded by WTW, will focus on the synchrony of major perils such as tropical cyclones, wildfires, and severe convective storms and the potential impact on the industry's aggregate exposure to catastrophic losses. It forms part of the Willis Research Network, WTW's academic collaboration platform, which works with universities and research institutes worldwide to feed emerging science into catastrophe modeling and risk management.
Catastrophic natural hazards remain a key driver of large losses for insurers and reinsurers, and the sector has traditionally relied on geographic diversification to reduce overall exposure. The prevailing assumption has been that major catastrophes are unlikely to occur in the same year in different regions, and that peril-to-peril correlations are weak enough that additional capital for such scenarios is not generally required.
Historically, statistical models have supported this view, with correlations between different perils and regions low enough that portfolios benefited from spreading risk globally. However, the acceleration of climate change, shifts in large‑scale climate patterns, and the growing influence of so‑called secondary perils have raised questions over whether past relationships will hold in future underwriting years.
Through the new collaboration, experts at Cornell and Willis will examine whether major perils have already become more correlated and model how that correlation could evolve over the next one to five years. At Cornell, the work will be supported by the Atkinson Center for Sustainability and carried out by Dr. Jonathan Lin, Dr. Toby Ault, and Dr. Flavio Lehner in the university’s Earth and Atmospheric Sciences Department.
The work goes directly to questions of capital adequacy, reinsurance design, and portfolio construction. If correlations between perils increase, the benefit of traditional diversification strategies could diminish, leaving portfolios more exposed to clusters of events than standard models suggest.
That, in turn, could influence appetite for aggregate covers, retrocession, and the use of insurance‑linked securities as firms reassess how much correlation risk is embedded in peak‑zone and multi‑peril structures.
The partnership also reflects a broader push by regulators and rating agencies for insurers to treat climate risk as a forward‑looking strategic issue rather than a purely backward‑looking one. More robust views of potential peril synchrony can feed into climate scenario analysis, capital modeling, and stress testing, and may ultimately shape how boards think about risk tolerance and diversification benefits across global books of business.
"Understanding how multiple natural perils may align in a warming world is becoming increasingly important for reinsurers, who have traditionally modeled the risk from different perils independently," said Cameron Rye, director of natural catastrophe analytics for Willis Re. "By combining Cornell's cutting-edge research with Willis' deep industry experience, we can give our clients clearer visibility into evolving catastrophe risks and support more resilient decision-making."
