A rapidly strengthening El Niño is expected to reshape catastrophe risk around the world into early 2027, suppressing Atlantic hurricane activity while increasing the probability of damaging weather in other regions, according to forecasters and insurance industry experts.

The shift is already showing up in the latest Atlantic hurricane forecasts. U.S. forecasters have lowered expectations for the 2026 season as strengthening El Niño conditions make the tropical Atlantic less favourable for storm formation and intensification.

The National Oceanic and Atmospheric Administration has increased the likelihood of a below-normal Atlantic hurricane season in its latest outlook, while Colorado State University has maintained its sharply reduced forecast of nine named storms, four hurricanes and one major hurricane.

But lower Atlantic activity doesn't mean lower catastrophe risk everywhere.

A strengthening El Niño can redistribute weather hazards across the globe, increasing the likelihood of tropical cyclones in parts of the Pacific and contributing to drought, wildfire and extreme rainfall in other regions.

NOAA's latest formal El Niño assessment said the event was expected to strengthen through the end of 2026 and had a 97% chance of persisting into early spring 2027.

The agency's July outlook also put the probability of a "very strong" El Niño between October and December at 81%, which would place the event among the strongest since records began in 1950.

Such an event is sometimes described as a "Super El Niño", although the term isn't NOAA's formal classification.

Warming develops unusually quickly

El Niño occurs when sea-surface temperatures across the central and eastern equatorial Pacific become unusually warm and changes in the atmosphere reinforce the ocean warming.

A particularly strong event is sometimes referred to as a Super El Niño, generally associated with sea-surface temperature anomalies reaching about 2°C above average in a key part of the tropical Pacific.

NOAA's July assessment showed that warming was already substantial but varied considerably across the Pacific. The weekly Niño-3.4 index, one of the principal measures used to track El Niño, stood at 1.2°C above average, while the Niño-1+2 region farther east had reached 2.7°C above average.

Munich Re meteorologist and natural catastrophe solutions manager Mark Bove said the pace of the warming had been unusual.

“We have seen the warming ramp up much faster and much earlier in the summer than we have with other El Niños,” he said. “Large Super El Niños tend to have certain phenomena associated with them. Weather patterns tend to become more fixed and amplified during strong El Niños compared with weaker ones.”

Those changes matter because El Niño can alter atmospheric circulation and weather patterns thousands of miles from the tropical Pacific.

For insurers and catastrophe modellers, the result isn't simply an increase or decrease in overall risk. Instead, the location and type of potential losses can change.

Atlantic hurricane risk falls

One of the clearest effects is in the Atlantic.

El Niño typically increases upper-level winds across the Caribbean, Gulf of Mexico and parts of the tropical Atlantic. The resulting vertical wind shear can disrupt developing tropical cyclones, making it more difficult for them to organise and strengthen.

That influence has contributed to increasingly subdued forecasts for the 2026 Atlantic hurricane season.

Colorado State University maintained its reduced outlook in its latest update, forecasting nine named storms, four hurricanes and one major hurricane during the season. Its earlier forecasts had anticipated greater activity before the developing El Niño became a stronger influence.

The reduced forecasts offer some relief to insurers with substantial U.S., Caribbean and other Atlantic hurricane exposure, but they don't eliminate the possibility of a major insured loss.

Hurricane Andrew provides a stark precedent.

Andrew struck South Florida as a Category 5 hurricane in August 1992, during an El Niño year. The Insurance Information Institute estimated its insured losses at $27.3 billion when measured in 2017 dollars.

A single major hurricane hitting a densely populated area can therefore make an otherwise quiet season extremely costly.

For insurers and catastrophe modellers, El Niño and La Niña are also considered as part of a longer climate cycle rather than solely as indicators for an individual hurricane season. Longer-term risk views typically incorporate El Niño, La Niña and neutral years when assessing potential hurricane losses and portfolio exposure.

Pacific cyclone exposure rises

While the Atlantic may become less favourable for hurricanes, parts of the Pacific can face the opposite effect.

Strong El Niño conditions can increase hurricane activity in the eastern and central Pacific and alter tropical cyclone patterns farther west.

Pacific Mexico and Hawaii can face increased hurricane exposure, while shifts in western Pacific typhoon activity can affect Japan, China and the Korean Peninsula.

The effects aren't uniform, and El Niño doesn't determine whether a particular location will experience a disaster. Instead, it changes the probability of certain weather conditions developing.

That distinction is important for insurers trying to assess accumulations across multiple markets.

Reduced hurricane risk in one region can coincide with increased cyclone, flood, drought or wildfire exposure elsewhere, potentially shifting losses between portfolios rather than eliminating them.

Wildfire and drought risk increases

The effects of a strong El Niño extend beyond tropical cyclones.

Parts of Australia, Indonesia, Malaysia and South America can face greater drought and wildfire risk as rainfall patterns change.

The western U.S. can also experience shifts in fire and rainfall exposure, although the relationship is more complicated in California.

A wetter El Niño winter can reduce wildfire conditions in the short term. But additional rainfall can also encourage vegetation growth, which can later dry and become fuel once the rains end and California's Mediterranean dry season returns.

Heavy rainfall creates another hazard.

Intense rain over recently burnt terrain can trigger debris flows and mudslides because fire can strip vegetation from slopes and change the ability of soil to absorb water.

Those risks have taken on greater significance following the January 2025 Los Angeles wildfires, including the Eaton and Palisades fires.

Munich Re estimated that the Los Angeles fires caused about $53 billion in total losses and $40 billion in insured losses, making them the costliest wildfire disaster on record.

The scale of those losses demonstrated how quickly extreme weather and heavily exposed property markets can combine to create a major insurance event.

Effects could reach reefs and fisheries

The consequences of a very strong El Niño can extend beyond insured property.

Changes in ocean temperatures and circulation can place additional stress on coral reefs already exposed to unusually warm seas.

El Niño can also disrupt major fisheries along the Pacific coast of South America. Changes in ocean circulation and nutrient-rich upwelling can affect fish populations, catches and the communities and industries that depend on them.

A strong El Niño can also contribute to higher global temperatures, increasing concern about compound events in which unusually warm background conditions interact with regional weather extremes.

The precise consequences will vary widely by region, and neither El Niño nor any other single climate pattern can be used to predict individual catastrophes.

For the insurance industry, however, the developing event is an important signal about how the probability of losses may change across different territories and perils.

“El Niño only shifts the probability (of risk),” Bove said. “Some areas may potentially benefit, while other areas unfortunately face higher probabilities of extreme events.”

For the Cayman Islands, a stronger El Niño could offer some relief by making conditions across the Atlantic basin less favourable for hurricane development and intensification.

But it doesn't remove the islands' hurricane exposure. A below-average Atlantic season can still produce a destructive storm, and Cayman remains vulnerable to hurricanes that form or strengthen in the Caribbean.

For insurers with Cayman and wider Caribbean exposure, the developing Super El Niño is therefore less a sign that catastrophe risk has disappeared than that the global risk map is shifting.