AM Best, the credit rating agency, has issued a cautionary statement regarding the US National Oceanic and Atmospheric Administration’s (NOAA) decision to cease updates to its billion-dollar weather disaster database, warning that this move could significantly impair insurers’ ability to monitor and respond to escalating secondary peril losses.
The NOAA database, established in 1980, has long served as a vital resource for tracking weather events causing at least $1 billion in economic damage.
While historical records will remain accessible, NOAA will discontinue adding new data beyond 2024.
The timing is notable: both 2023 and 2024 each saw over 25 billion-dollar weather disasters—28 and 27 events respectively—far exceeding the 2010–2022 annual average of 15.
Remarkably, 2023’s figure was reached without a single NOAA-named hurricane, underscoring the rising prevalence of non-traditional, high-impact weather events.
In a related Best’s Special Report, “US Weather Event Risks Highlight Need for Stress Testing,” AM Best underscored the consequences of losing access to regularly updated data at a time when insurers are already under pressure from intensifying climate-related exposures.
The firm noted that up-to-date catastrophe data is essential for modeling risk, designing reinsurance programs, and evaluating capital adequacy in light of more volatile event patterns.
The insurance market in 2024 has already absorbed significant catastrophe losses, driven by two major hurricanes—Helene and Milton—as well as widespread damage from severe convective storms.
Wildfires, such as those that broke out in California earlier this year, continue to stress underwriting strategies and reinsurance availability, particularly in areas facing regulatory constraints and rising risk concentrations.
According to AM Best, secondary perils—those weather-related events outside traditional primary perils like named hurricanes and earthquakes—have emerged as a dominant cause of loss for US property and casualty carriers.
These include tornado outbreaks, hailstorms, and regional flooding, which have become more severe and frequent in recent years, driven by climatic shifts, inflation, and population movement into more hazard-prone zones.
The elimination of NOAA’s real-time disaster data may hinder insurers’ ability to adapt underwriting and pricing strategies in step with evolving risks.
AM Best emphasised that, in the absence of new federal reporting, companies must enhance their reliance on advanced catastrophe models, private data sources, and rigorous stress testing to stay ahead of the growing impact of secondary perils.
Sridhar Manyem, Senior Director, Industry Research and Analytics, AM Best, added: “Having a common and agreed-upon data source would help insurers trend these losses in their modelling and use the data for pricing, reinsurance and risk management, as well as help assess the gap between insured losses and economic losses and see how insurance can work to minimise the gap.
“Additionally, if more of these data sources were to disappear, parametric triggers within catastrophe bonds, which depend on measurements by the 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.”
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