With US government programs that support public data access—including weather reporting—on the chopping block, the fog is rolling in for the industry that underpins the global financial sector: insurance.
The pseudo-governmental Department of Government Efficiency (DOGE) led by Senior Adviser to President Donald Trump, Tesla and SpaceX CEO, and X Chairman and CTO Elon Musk has targeted, in “move-fast-break-things” fashion, an alphabet soup of government agencies — from USAID to the USDA. The alleged fiscal benefits are part of an ongoing debate that is likely to play out for years to come. The harms to humans are increasing; journalists have documented a growing death toll arising from sudden cuts to foreign aid and other public benefits.
Among the impacted agencies are the National Weather Service (NWS) and the National Oceanic and Atmospheric Administration (NOAA), which have both been the subject of DOGE-induced staffing cuts. Both agencies have had to scale back on core functions in response. Most notably, during the typical season when severe weather patterns tend to batter the continental US with severe thunderstorms and tornadoes, the NWS has had to suspend weather balloon launches in eight locations. Experts say weather balloons “give you information you can’t get any other way” and are “an absolutely essential piece of the forecasting system.”
Of course, this is not just for insurance purposes: These systems give visibility to communities and help save lives. As the latest World Meteorological Organization Climate Report showed, this helps with preparation as well as planning and building. “Early warning systems have proved to be efficient systems that governments can use to move communities out of harm’s way before a disaster or manage the event in situ… Disaggregated data — showing the frequency, triggers and sequence of displacement — can help response and development planners mitigate impacts on displaced people and host communities.”
“The potential defunding of public data sources like the National Weather Service would significantly impact our ability to underwrite and evaluate risk effectively in the insurance industry,” Patrick Caruso, President of California-based independent agency Caruso Insurance Services, said in an interview with Fintech Nexus. “We’ve intricately designed our operations around precise data, crucial for policies like flood and hurricane insurance. Without reliable sources, predicting specific risks tied to weather becomes a challenge.”
Information has been the currency of the realm in insurance since its inception, as prediction and risk management are essential to maintaining the capital coffers that have made the industry the foundation on which modern finance is built. The day-to-day travails of an insurer in the late 1700s involved channeling a degree of oracular savvy. Facing a dearth of information about political conditions, inclement weather, buccaneering, and other volatile variables governing commerce on the high seas — where most insurance policies applied at that time — the most successful insurance companies cultivated a rich network of sources and information in the name of risk quantification and, by extension, profit.
“American marine insurance companies profited throughout this period … because they were the new republic’s preeminent market interpreters in a world at war,” writes Dr. Hannah Farber, a professor of history at Columbia University and the author of Underwriters of the United States: How Insurance Shaped the American Founding. “Insurers’ panoramic knowledge of commercial arcana, international law, the latest political news, and recent ship captures enabled them, and the merchants they insured, to profit.”
Insurers collected information that the “American state had no infrastructure to collect on its own,” serving as an intelligence-gathering extension of the US during its nascent years; this enabled the insurance industry to make markets, not just interpret them, by intervening in political and legal affairs as a private-sector brain of the state. Belonging to a powerful professional class whose practices and institutions predated the modern-day democratic state, insurers were “not just the commercial world’s chief expert and enforcer but also something like its high priest,” Farber writes.
“It’s hard for people to see government and private initiative in the same lens sometimes, but … insurance’s operating environment is always determined by government in some way,” Farber told Fintech Nexus.
The relationship between actuarial and political classes has changed significantly over time. Insurers are certainly still powerful — writing nearly $2 trillion in premiums in the US in 2023, successfully keeping the health insurance in its private-sector grip, and so forth — but, over the centuries, as the US state firmed up power domestically and internationally through force, commerce, and statecraft, and diversified its revenue streams beyond tariffs, so did its information-gathering capacities. Fast forward to 2025, and insurers and agencies like the National Security Administration largely do not operate on the same playing field.
Andrew Harris, President of New Jersey-based Liberty Insurance Associates, told Fintech Nexus that the defunding or dismantling of public data sources like the NWS could exacerbate systemic losses during natural disasters and other catastrophes.
“Businesses often rely on commercial property insurance to protect against disasters like floods and hurricanes. Without reliable data on weather patterns and forecasts, predicting these events becomes challenging, increasing the uncertainty in underwriting,” Harris said, noting that over 25% of businesses that close after a flood don’t reopen. “This kind of gap could lead to higher premiums for businesses or, worse, inadequate coverage, resulting in severe financial losses when unexpected events occur.”
As the administration continues to eliminate funding for disaster assistance for government orgs like the Federal Emergency Management Agency, or FEMA, which helps rebuild flood affected communities, the knock-on effects for businesses may be even more pronounced.
Caruso said the agency’s custom insurance solutions for the solar energy sector “rely on accurate weather forecasts and historical data to assess risks associated with equipment and installation sites.” Lapses in public data could potentially lead to “less comprehensive insurance options,” and force the independent agency to seek private sources of data, “leading to increased costs and reduced accessibility for smaller agencies.”
In a prepared statement, the National Association of Insurance Commissioners (NAIC) said it was “not able to speculate about the full impacts of federal workforce reductions,” but “recognizes that data collection is essential for accurate risk assessment, effective underwriting, and proactive mitigation strategies for insurance companies, local governments, and consumers alike”:
Through collaboration via the NAIC, state insurance regulators are squarely focused on protecting U.S. consumers and ensuring the stability of insurance markets, which include property & casualty markets, across the country. As described in our February 2025 press release discussing NAIC Committee priorities for the year ahead, the National Climate Resilience Strategy for Insurance aims to drive more effective risk reduction in 2025 and beyond. As part of these efforts, state insurance regulators will continue to emphasize pre-disaster mitigation to reduce climate impacts and assist consumers in pursuing possible premium reductions.
So, smaller insurance players fret about the potential for rejiggered unit economics driven by the eventual privatization of data to affect their ability to compete against insurance giants. Meanwhile, channeling entente-y rhetoric, a major industry standard-setting organization acknowledges the keystone relationship between data and risk, and identifies premium reductions as a priority.
Dismantling or atrophying state-provisioned providers of data crucial to the underwriting process doesn’t bode well for consumers, businesses, and insurers themselves. There’s also little beyond “market forces” or “customer expectations” that would ensure that privatized successors to the NWS or other data providers are actually up to snuff or comprehensively cover underserved geographies. (That’s a pro-government and -regulation line of thinking that rhymes with defenses of Fannie Mae and Freddie Mac’s continued conservatorship.) Add murky qualitative data in the form of administration-induced geopolitical uncertainty to the mix and things get even murkier — potentially throwing a wrench in insurers’ ability to navigate jolts caused by D.C.
For instance, the stop-start implementation of tariffs (a state coffer-filler of yore) has been a major operational headache for insurers — if not a strategic threat to some insurance subsectors. According to Jason Odgers, Senior Vice President of World Insurance Services, which insures freight-forwarding network WCAworld, supply chain-focused insurers are used to the imposition of tariffs, which are “not rocket science.” Without forewarning, insurers’ bonds may not adequately cover the assessed value of clients’ goods, leading to surety and liability issues, as well as cumbersome administrative obligations.
“There is a certain amount of agility necessary in a well-functioning supply chain,” he said. “It’s the uncertainty that makes it difficult.”
