For insurers, the periodic El Niño climate phenomenon has traditionally lowered the risk of costly Atlantic hurricanes. However, decades of population growth along coastal areas and rising property values are forcing them to rethink that assumption.

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. Insured losses across El Niño cycles are not directly comparable because the phenomenon has no set calendar period.

Since 1950, El Niño cycles have on average produced about two fewer named storms. But those numbers mask the true risks. The 1992 season, which came on the tail end of the 1991 El Niño, generated roughly half the average number of storms and hurricanes, but among them was Hurricane Andrew, one of the strongest storms ever to hit the United States.

Today, a major hurricane strike on Miami or Tampa, Florida; or on Houston — all dense, high-value metropolitan areas — could cause insured losses exceeding $100 billion, catastrophe risk modeling firm Karen Clark & Company said in a report this month.

Insurers Building More Sophisticated Models

El Niño is also associated with above-average rainfall across parts of the southern United States, increasing the likelihood of flooding, landslides and related damage — an adjacent risk insurers also have to increasingly consider.

Insurers are responding by developing increasingly sophisticated catastrophe models that combine seasonal climate signals with property-level exposure data to estimate the range of financial losses they could face from natural disasters.

Original reporting: Appleton, WI News Feed (HLL/CB) — read the source article.