Insurance analysts are sounding the alarm over a US government decision to decommission a key climate data tool widely used by reinsurers and risk modellers worldwide, including Bermuda’s catastrophe markets.

AM Best has warned that the US National Oceanic and Atmospheric Administration’s recent decision to stop updating its billion-dollar weather disaster database beyond 2024 could disrupt insurers’ ability to track and model losses from increasingly destructive “secondary perils” like wildfires, floods and convective storms.

The NOAA database, established in 1980, has long served as a go-to source for tracking US weather events that caused over $1 billion in damage.

In 2023 and 2024 alone, there were 28 and 27 such events respectively, including major hurricanes and wildfires – well above the 2010 to 2022 average of 15.

“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,” said Sridhar Manyem, senior director of industry research and analytics at AM Best. “It also helps assess the gap between insured losses and economic losses and see how insurance can work to minimise the gap.”

The loss of the NOAA data could also impact parametric catastrophe bonds, which often rely on NOAA measurements to trigger payouts.

“If more of these data sources were to disappear, parametric triggers … may need to be redesigned,” Mr Manyem added.

While other countries operate similar databases, he cautioned that if private firms try to fill the gap, it could “take some years to build credibility and trust”.

Bermuda-based reinsurers play a major role in US catastrophe coverage, including roughly 30 per cent of the insured losses from the California wildfires in January, nearly $10 billion.

The retirement of the database may be just one part of a broader dismantling of federal climate infrastructure.

According to reporting by ProPublica, the Trump administration has proposed deep cuts to NOAA, threatening the future of the science that helps insurers and governments plan for climate risks.

A leaked memo from the Office of Management and Budget, viewed by ProPublica, outlined a 27 per cent reduction in NOAA’s overall funding, targeting “almost all… related to the study of climate change.”

The biggest blow would fall on NOAA’s Office of Oceanic and Atmospheric Research, which would be slashed by 74 per cent, effectively eliminating it.

This office includes the prestigious Geophysical Fluid Dynamics Laboratory, a 57-year-old partnership with Princeton University responsible for some of the world’s most advanced climate models.

The memo described the aim as eliminating “functions … misaligned with the President’s agenda,” and proposed breaking up NOAA’s internal structure, curtailing ocean research and even shifting key satellite programmes to commercial bidders.

Scientists have warned that such cuts could inflict “irreparable harm” on global climate modelling and the ability to forecast severe weather events, ProPublica reported.