Insurance industry financial strength rating agency AM Best said today tha
t a decision to stop updating a National Oceanic and Atmospheric Administra
tion disaster database cou
ld be detrimental to insurers and may require the rethinking of some products.
About two weeks
ago NOAA announced it will “retire” a free, public database of climate a
nd weather disasters th
at caused at least $1 billion in damage, “with no updates beyond calendar year
2024.” Past reports from 1980-2024 will be archived.
AM Best said the move could affect insurers’ ability to track losses from so-c
alled secondary perils such as wildfires, floods, and severe convective storms.
This group of perils is an increasing cause of catastrophe losses, especially in North America.
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“Having a common and agreed-upon data source would help insurers trend these losses in their modeling and use the data for pr
icing, reinsurance and ris
k management, as well as help assess the gap between insured losses and econom
ic losses and see how insurance can work to minimize the gap,” said Sridhar Manyem, AM Best’s senior director, industry research and analytics, in a statement.
Related: Insured Losses Could Hit $145B in 2025, Driven by Rising Claims From Secondary Perils
AM Best pointed out that the end of the service by NOAA comes following a year of 27 weather events with at least $1 bi
llion in damages. Manyem said if more databases disappeared, “parametric tri
ggers within catastrophe bonds, which depend on measurement by NOAA, may need to be redesigned.”
“While some other countries have governmental agencies that track similar data, private companies may have to step in to fill the void and it could take some years to build credibility and trust among market participants,” he added.