The insurance industry relies on a steady flow of publicly available data to predict losses, price policies, and mitigate financial exposure.
What happens when those data streams dry up? We’re on the verge of finding out.
Recent governmental workforce reductions, agency closures and “streamlining” initiatives fostered by President Donald Trump, his unelected advisor, Elon Musk, and the newly formed Department of Governmental Efficiency (DOGE) blew massive holes in once-reliable datasets.
The potential implications for insurers are staggering: reduced accuracy in underwriting, higher loss ratios, and an inevitable increase in premiums for policyholders.
Plainly put, if insurers are starting to feel the squeeze, everyone else will feel it, too.
The vanishing data crisis
In the insurance industry, public sector data fuels risk modeling, underwriting and even claims. Crime figures, flood maps, historical wildfire statistics, and measurements or reports on infrastructure conditions contribute heavily (to put it mildly) to insurers’ ability to assess risk. But, with government agencies being shut down or stripped of resources, the collection, publication and maintenance of databases that list, utilize, or hold these types of data (and much more) are vanishing.
A recent Associated Press article indicated that freshly rescinded access to key crime statistics by the Department of Justice (DOJ) has wiped out detailed breakdowns of state-level crime trends.
Similarly, Politico’s “19 states sue Trump, Treasury to halt DOGE access,” published on February 7, 2025, highlights the federal government’s removal of environmental risk assessments, leaving insurers blind to Mother Nature’s hazards, like wildfire spread and flood-prone zones.
This isn’t just an inconvenience; it’s a crisis.
Exactly what’s disappearing?
These are the critical data categories that insurers or insurtech companies may soon struggle to access, all of which would make it harder to properly assess risks and price policies. Ultimately, the consequences could be more expensive and less accurate insurance.
Without these datasets (or the ability to ensure accuracy and continuity of these datasets), insurers will face increased uncertainty, leading to two inevitable outcomes:
- Higher premiums for policyholders. Without the ability to make precise risk assessments, insurers will likely default to caution—meaning everyone pays more.
- More denied claims and canceled policies. If insurers can’t assess risks properly, there could be a dramatic increase in their refusal to cover certain regions or property types altogether.
This data drought also could lead to the growth of “insurance deserts,” or regions where businesses and homeowners can’t get coverage because the remaining data is too unreliable and risks too uncertain.
The big picture: Data as a public good
While I’m pulling the emergency handle on ways I believe this vanishing data crisis will impact the insurance industry, it is important to note that insurance isn’t the only sector that stands to take a hit (IMHO). Real estate, finance, healthcare, and local governments all rely on the same datasets. When data disappears, it doesn’t just leave insurers scrambling — it blinds entire industries that depend on accurate risk assessments to make informed decisions.
The limitation of the collection of and access to public data not only feels like more than just a bureaucratic reorganization, it could be a foundational change to how risk gets assessed. Private data providers may step in, but questions of collection criteria, data quality, and transparency will likely limit utilization. That could lead to increased disparities in coverage availability, pricing, and accessibility.
What’s next?
Granted, government collected data or publicly available data is just one piece in the insurance rating, quoting, underwriting puzzle. However, federal departments and agencies, including NOAA, CDC, U.S. Department of Education, the Census Bureau, Department of Veterans Affairs, the Department of Defense (DoD), the National Nuclear Security Administration, the Food and Drug Administration (FDA), and the National Institutes of Health (NIH), have all experienced significant cuts, the impact of which has yet to become completely clear.
If it hasn’t happened already, I suspect insurers will start scrambling to find alternative data sources on which rates can be based that do not use publicly available data. Some may turn to expensive private data vendors, while others will invest in proprietary data collection. But, make no mistake: The industry is facing a seismic transformation (whether the data gods are ready to admit it or not).
The question isn’t if insurance will change; it’s how disruptive that change will be.
And for policyholders, the fallout will be felt in their (physical and digital) wallets.