With summer's arrival, a familiar climate phenomenon is quietly gaining strength in the Pacific. Ocean temperatures are already flirting with record highs, and forecasters are warning that we may be heading toward a rare “Super El Niño”—one of the strongest such occurrences on record.
For insurance professionals, this is more than a simple meteorological curiosity. The "Super El Niño" is an event capable of impacting risks across geographies, perils, and lines of business. The potential impacts are difficult if not impossible to predict, heightening the importance of mitigating or transferring risk when possible.
Continued warming trend points to wild weather
Global sea surface temperatures in April, the strongest predictor of El Niño patterns, were among the highest ever recorded for that month (opens a new window). This was driven by intense marine heatwaves in the equatorial Pacific—part of a broader warming trend that globally delivered the 3rd strongest April temperatures on record.
Forecasts now suggest an 82% probability that El Niño will develop between May and July 2026, and up to a 96% chance it persists through winter 2026–27. Many models go further, pointing to a meaningful likelihood that the event could reach “super” strength (opens a new window), defined by temperature anomalies exceeding 2°C above normal. Such events are rare—only a handful have occurred since 1950, but their impacts are disproportionately large.
The mechanism is straightforward. Unusually warm Pacific waters release heat into the atmosphere, disrupt trade winds, and shift the jet stream. The result is a global increase in volatile and anomalous weather (opens a new window)—drought where rain should be, floods where dryness is expected, and especially heat layered atop an already warming climate.
From climate variability to loss variability
For insurance decision makers, El Niño’s defining feature is its unpredictability—ironically pointing to a very high certainty of more unexpected weather events. El Niño patterns can simultaneously trigger flood losses in one region, drought-driven claims in another, and wildfire exposure elsewhere (opens a new window).
Insurance markets have been heavily impacted by climate volatility over the last several decades. A Super El Niño adds another layer—potentially driving higher claims frequency, reinsurance costs, and premium pressure, especially in flood or drought exposed regions. Notably, flood risk remains structurally underinsured in many markets (opens a new window), particularly in the U.S., where standard homeowners’ policies exclude it. That gap becomes more consequential when precipitation patterns deviate sharply from historical norms.
Historical analysis of previous Super El Niño periods show catastrophic losses across crop failures and infrastructure damage, potentially fueling inflation and therefor underwriting decisions and premiums in the future.
Implications for insurance decision-makers
For risk managers, a looming Super El Niño is less a single event than a portfolio stress test. Key considerations include:
Geographic risk rebalancing: Expect non-linear shifts in loss patterns. Regions typically seen as low-risk may experience outsized impacts, particularly from flooding or storm activity.
Model uncertainty: Catastrophe models incorporate ENSO cycles, but a “super” event—particularly in a warming climate—can exceed modeled expectations. Scenario planning becomes essential.
Reinsurance dynamics: A season of elevated global losses could tighten reinsurance capacity and increase costs, particularly if multiple perils (flood, wildfire, agriculture) trigger simultaneously.
Product gaps and opportunity: Flood insurance, parametric products, and climate-linked covers may see increased demand as traditional policies fall short of emerging risks.
Secondary perils take center stage: As seen in recent years, smaller but more frequent events—convective storms, flash floods, drought-related losses—may dominate claims volumes under El Niño conditions.
The bottom line
El Niño is often described as a cyclical climate event. But a Super El Niño—especially in today’s warming world—is better understood as a global risk redistribution mechanism. It does not create risk out of thin air, but rather moves it—rapidly, unevenly, and sometimes unexpectedly. The coming months will clarify whether 2026 delivers a full-fledged Super El Niño, but the data clearly points that direction.
For an industry built on anticipating the improbable, that should command close attention.
Find more insights and learn what makes Lockton different by visiting our Food, Ag, and Beverage practice page (opens a new window).
