El Niño is back - U.S. government scientists said the climate pattern arrived in June, coinciding with the start of the Atlantic hurricane season. Historically, warmer-than-average Pacific sea surface temperatures associated with El Niño tend to create atmospheric conditions that suppress Atlantic hurricane formation. The government forecast for 2026 calls for a below-average season of eight to 14 named storms and one to three major hurricanes.
For property insurers and reinsurers, however, a lower tally of storms does not automatically translate into lower risk. Industry participants, catastrophe modelers and analysts caution that demographic and economic changes along U.S. coastlines have increased the amount and value of assets exposed to tropical cyclones. That combination means the consequences of a single landfalling storm can be far more severe today than in past decades, even during El Niño years.
Why lower storm counts are only part of the picture
On average, an Atlantic hurricane season produces 14 named storms, seven hurricanes and three major hurricanes, according to government data. Between 2016 and 2024, annual insured losses have averaged around $30 billion, per Aon. El Niño cycles, which occur every two to seven years and typically last nine to 15 months, have historically reduced storm counts: since 1950 El Niño phases have on average produced about two fewer named storms, according to Jeffrey Strong, senior scientist for tropical cyclone modeling at Verisk.
But those averages obscure the concentration risk posed by where storms make landfall. "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.
Past seasons illustrate the point. The 1992 season, occurring on the tail end of the 1991 El Niño, had roughly half the average number of storms and hurricanes, yet included Hurricane Andrew, which struck South Florida and later Louisiana. The Swiss Re Institute estimates Andrew alone would cost the insurance industry nearly $100 billion if it hit today. By contrast, the record-breaking 2020 season featured 30 named storms, 14 hurricanes and seven major hurricanes, but produced around $30 billion of insured losses because many storms did not strike densely populated, high-value areas.
Coastal growth and higher replacement costs amplify single-event losses
Federal data show the population of coastal counties has increased by more than 40 million since 1970. That demographic expansion, combined with rising home values and higher reconstruction costs - each up sharply over the past decade, with home values rising more than 70% and reconstruction costs more than 60% - means a major hurricane striking a populous metro area could trigger exceptionally large insured losses.
Catastrophe modeling firm Karen Clark & Company noted in a recent report that a major hurricane making landfall in Miami or Tampa in Florida, or in Houston, could produce insured losses exceeding $100 billion. "Hurricanes are like real estate: the three most important things are location, location, location," the firm said.
Insurance executives emphasize that modern risk assessment must therefore account for exposure concentration and property values as much as seasonal storm forecasts. "We’re seeing higher insured values, more concentration in coastal areas, and more complex supply chains. That means the severity of a single event today can be materially higher than what we saw even a decade ago," said Monica Ningen, CEO of Property & Casualty Reinsurance US at Swiss Re.
Broader climate and modeling challenges
El Niño also tends to be associated with above-average rainfall across parts of the southern United States, which increases the probability of flooding, landslides and related damage - risks that insurers must consider alongside wind-driven hurricane losses.
But El Niño is only one factor within a growing suite of climate-related risks. Insurers note that climate change is shifting the landscape of catastrophe exposure by increasing the frequency and severity of flooding and wildfires, adding complexity to catastrophe modeling. "History has a limit in terms of how much it can teach us," said Steve Bowen, chief science officer at reinsurance broker Gallagher Re, cautioning that changing weather patterns may reduce the predictive value of traditional models.
In response, insurers are investing in more sophisticated catastrophe models that blend seasonal climate signals with property-level exposure data, aiming to better estimate the distribution of potential financial losses from natural disasters. Some in the industry are also deploying artificial intelligence to process larger volumes of weather and exposure data. "AI can help insurers analyze larger volumes of weather and exposure data," said Myra Thomas, an analyst at eMarketer, while noting it can "only go so far."
What insurers are doing and what remains uncertain
Executives and modelers say the industry is shifting its underwriting and pricing focus away from headline storm counts toward the geography and asset concentration of potential strikes. There is also attention on longer-term trends that alter catastrophe risk assessments, including rising reconstruction costs and the evolving cost of capital required to absorb major losses.
At the same time, structural uncertainties remain. El Niño cycles do not follow a fixed schedule and their durations vary. Insured losses across El Niño cycles are not directly comparable on a one-to-one basis because the phenomenon can last anywhere from nine to 15 months and interacts with other climate and socioeconomic factors. As a result, a forecast of fewer storms provides limited assurance that insured losses will be modest.
Bottom line
El Niño’s arrival and the expectation of a below-average 2026 Atlantic hurricane season may reduce the overall number of storms. However, insurers caution that decades of coastal development, higher property values and climbing reconstruction expenses mean exposure is concentrated in fewer, more valuable locations. That concentration makes the market vulnerable to outsized losses from a single landfalling hurricane or related flooding events, even in quieter seasons. Industry efforts are focused on refining models and pricing to reflect where storms may hit and the value at risk, rather than relying solely on seasonal storm counts.