0.25 CIP Points
El Niño: The next test for insurers
As a strengthening El Niño redistributes climate risk across Asia-Pacific, insurers face shifting claims, widening protection gaps and mounting pressure to refine models, pricing, resilience and customer support strategies now. By Anna Lopata - ANZIIF senior writer Four years ago,...
10 Aug 2026
5 mins read
Summary
In short
- El Niño shifts rather than removes risk, increasing the likelihood of heat, drought and bushfire in some markets while altering typhoon and flood exposure elsewhere.
- Insurers must prepare for indirect losses, including repair delays, energy disruption, agricultural damage, reduced productivity and business interruption.
- Historical claims remain valuable, but forward-looking climate data and closer monitoring of portfolio accumulations are increasingly important.
- Closing Asia-Pacific’s protection gap will require mitigation, insurance innovation and stronger partnerships between insurers, governments and communities.
As a strengthening El Niño redistributes climate risk across Asia-Pacific, insurers face shifting claims, widening protection gaps and mounting pressure to refine models, pricing, resilience and customer support strategies now.
By Anna Lopata – ANZIIF senior writer
Four years ago, insurers across Australia were dealing with the wettest phase of the climate cycle. Consecutive La Niña events brought destructive floods, saturated catchments and thousands of weather-related claims.
The next test looks very different and will likely be characterised by fire, heat and drought.
El Niño is firmly established and strengthening across the tropical Pacific. Australia’s Bureau of Meteorology expects the event to peak in late spring or summer while the US National Oceanic and Atmospheric Administration (NOAA) says it is highly likely to persist into early 2027. But insurers know better than to focus on the climate signal alone.
Unlike La Niña, which tends to concentrate attention on flooding and severe storms, El Niño redistributes risk.
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