Insurance industry analysts are raising concerns over the US government's plan to stop updating a key dataset widely used to track and model climate-related disasters.
The decision by the National Oceanic and Atmospheric Administration (NOAA) to cease updates to its billion-dollar weather disaster database beyond 2024 has prompted warnings from ratings agencies and reinsurers about potential disruptions in underwriting and risk modeling practices.
AM Best said the NOAA database, which has cataloged US weather events causing at least $1 billion in damages since its inception in 1980, is a critical resource for assessing loss trends related to so-called secondary perils.
These include wildfires, floods, and convective storms – perils that have become more frequent and costly in recent years. There were 28 qualifying events in 2023 and 27 in 2024, according to the latest available data. Both totals exceed the annual average of 15 from 2010 to 2022.
Sridhar Manyem, senior director of industry research and analytics at AM Best, said that insurers use the NOAA database to trend losses for modeling purposes and to inform pricing, reinsurance, and broader risk management strategies.
“It also helps assess the gap between insured losses and economic losses and see how insurance can work to minimize the gap,” Manyem said.
Manyem said that without a standardized and publicly accepted source of data, some insurance functions may be affected. The impact could extend to parametric catastrophe bonds, which often rely on NOAA data to establish payout triggers. A change in data availability may require reconfiguring how these bonds operate.
“If more of these data sources were to disappear, parametric triggers … may need to be redesigned,” said Manyem.
He also noted that although other countries have developed similar resources, private firms seeking to replace NOAA’s role could face a lengthy process to gain industry acceptance. Establishing credibility and consistency in new datasets could take several years.
The NOAA billion-dollar disaster database has been a foundational resource in the US for more than four decades. Established in 1980, the database has tracked the frequency, scale, and economic impact of significant weather and climate disasters.
It is one of the few publicly available tools that compiles standardized and inflation-adjusted data across all major perils, offering a historical view of loss development patterns.
Parametric insurance products, which provide claims payouts based on the occurrence of predefined event metrics rather than on actual losses, are among the solutions potentially impacted by NOAA's decision.
These instruments depend on trusted and consistent datasets like those provided by NOAA to trigger payouts for covered events. Without reliable federal data, issuers may need to redesign product structures or identify new sources to maintain credibility with investors and policyholders.
Private firms are expected to attempt to bridge the gap left by NOAA, but challenges around data standardization, methodology transparency, and historical continuity may limit their near-term usefulness.
Industry experts suggest it may take years for private providers to gain the level of trust and adoption NOAA’s long-running dataset has achieved. During the transition, insurers could face inconsistencies in data quality, leading to potential complications in risk assessment and pricing.
The implications of losing a publicly funded, centralized climate disaster dataset may also extend beyond the insurance sector. Policymakers, researchers, and communities have long relied on NOAA’s database for public risk analysis and resilience planning. Without regular updates, gaps may emerge in public understanding of disaster trends, potentially affecting policy responses and investment in climate adaptation.
Reinsurers in Bermuda are among the entities expected to be affected. The jurisdiction plays a significant role in covering US catastrophe exposures, including an estimated 30% of insured losses from the January California wildfires. Those losses totaled nearly $10 billion.
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