For insurers, the periodic El Niño climate phenomenon has traditionally lowered the risk of costly Atlantic hurricanes, but decades of population growth along coastal areas and rising property values are forcing them to rethink that assumption.
Marked by warmer-than-average sea surface temperatures in parts of the Pacific Ocean, El Niño typically suppresses Atlantic hurricanes by creating atmospheric conditions that make it harder for storms to form.
U.S. government scientists said El Niño arrived in June, which was also the start of the Atlantic hurricane season. They expect a below-average season in 2026 of eight to 14 named storms and one to three major hurricanes.
While historically that would be good news for property insurers, which in recent years have faced an average of $30 billion in insured losses each season, that is less and less the case, said insurance brokers, catastrophe modelers and analysts.
Decades of development along U.S. coastlines have dramatically increased the amount of property exposed to hurricanes, with the population of coastal counties rising by more than 40 million since 1970, federal data shows.
Combined with higher home values and reconstruction costs, both of which have risen more than 70% and 60%, respectively, over the past decade, that coastal expansion means that even a relatively quiet hurricane season can produce severe losses.
As a result, insurers are rethinking how they assess and price catastrophe risk, focusing less on the number of storms and more on where they make landfall and the value of property in their path, executives said.
“All it takes is one landfalling hurricane to create an insured loss of a magnitude we’ve never seen before … And that could absolutely happen in an El Niño year,” said Kimberly Roberts, advisory leader of North American peril at reinsurance broker Guy Carpenter.
Where Storms Hit Matters Most
A hurricane season generates on average 14 named storms, including seven hurricanes, of which three are major, according to government data, with annual insured losses averaging around $30 billion between 2016 and 2024, according to data from Aon.
Insured losses across El Niño cycles, which occur every two to seven years, are not directly comparable because the phenomenon has no set calendar period, lasting anywhere from nine to 15 months.
Since 1950, El Niño cycles have on average produced about two fewer named storms, according to Jeffrey Strong, senior scientist for tropical cyclone modeling at insurance data firm Verisk.