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Insurers have warned that mass firings at US science agencies could threaten the critical weather and geospatial data that the industry uses to manage natural disaster risks and potentially raise prices for consumers.
The Reinsurance Association of America, a trade group, is lobbying US commerce secretary Howard Lutnick to preserve data collection at the National Oceanic and Atmospheric Administration, after the department said that it would fire more than 1,000 staff.
The agency oversees the National Weather Service and monitors the vast oceanic and atmospheric conditions of the nation, including “Hurricane Hunter” jets which provide real-time storm data critical to accurate forecasts.
Insurers have also privately raised concerns over hundreds of additional cuts to Nasa, US Army Corps of Engineers, and the US Geological Survey, announced as part of the swath of lay-offs to the federal workforce.
Top concerns included the live tracking of hurricanes, tornadoes, and hailstorms, and the monitoring of drought conditions, using satellites and on-the-ground modelling, that can help raise the alarm for wildfires, Frank Nutter, president of the Reinsurance Association of America, told the Financial Times.
“What Noaa provides is an infrastructure of facilities that produce the data — satellites, ships, weather buoys — that the insurance industry doesn’t have,” Nutter said.
Oliver Wing, chief scientist at Fathom, a flood modeller owned by reinsurer SwissRe, which licenses its products to insurers and brokers including AXA and Aon, said his company was particularly concerned about a potential interruption to rainfall and tidal data produced by Noaa as well as terrain data from USGS, which uses airborne laser altimetry (LIDAR) to measure ground elevation.
“Another big concern is NOAA’s forecasting — particularly hurricane — and ‘now-casting’ capabilities. If we can’t feed that into our models to give our insurance clients a rough idea of what their exposure is looking like, that impacts their ability to make sensible short-term business decisions,” Wing said.
“Seasonal hurricane forecasts are also really important for insurers to make medium-term decisions on capital allocation or ceding their risks.”
Munich Re, the world’s largest reinsurer, told the FT that it was not dependent on individual data suppliers such as Noaa, but added that the agency information was “very valuable” for incorporating the latest knowledge into its monitoring and assessments.
The insurance industry broadly relied on data Noaa provided to produce accurate natural hazard risk models, it noted. “This particularly benefits insurance policyholders, because the more accurate the data, the more precise assessments can be made,” Munich Re said.
The head of climate analytics at a major insurer said government agencies, including Noaa, published peer-reviewed research with detailed methodology. If the insurer was forced to switch to licensing data from private providers, he said, his team might have trouble evaluating the value and accuracy of those products, as well as the consistency of data and methods across markets.
The cost of buying LIDAR data, hurricane forecasts and other model inputs from private operators of satellites, and other monitoring equipment, could be passed on to consumers, industry experts warned, raising the price of insurance.
If data collection from Noaa were interrupted or slowed, even historical data could become less valuable for modelling, Nutter said, since consistency across time matters for large and complex data sets on perils such as hurricanes.
“Noaa databases go back decades. They’ve been collected consistently, uniformly and neutrally, in that they’re not politicised or commercialised,” Nutter said. “If there’s a termination of certain data sources, then even if the historic data is still available, it becomes less valuable.”
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