El Niño: more than just a hurricane factor for insurers

An ongoing shift into El Niño brings risks well beyond its impact on the much-watched Atlantic hurricane season with wind drought, heat waves and wildfire set to unleash their own chain of economic impacts, global brokerage  WTW has claimed.

“In total, the knock-on effects of El Niño extract a massive toll on the global economy,” WTW authors wrote, citing a recent study from Dartmouth University putting the global price tag of the major 1983 and 1998 El Niño events at nearly $4.1 trillion and $5.7 trillion, respectively.

“Should the Pacific flip to El Niño, businesses should prepare for record-high temperatures, unusual weather, and slower economic growth,” WTW analysts wrote.

Heatwaves are expected as, during an El Niño event, the atmosphere absorbs more heat while the ocean takes up less, authors note.

US severe convective storms, dominant on nat cat cost rankings, are breaking historical patterns, authors stated. They cite an increase in total storm counts, wintertime storm counts, storm pathways with scientific models suggesting supercells “are expected to occur more frequently in a warmer world.”

Wildfire also follows hand in hand, authors note, citing a record year of land loss in Canada. Major fires in Chile demonstrate how land-use issues dovetail with fire-inducing climate considerations, authors noted.

“Human activities, such as land use, often exacerbate the impacts of natural disasters as we saw this year with the floods in New Zealand and Italy, and wildfires in Chile,” authors wrote.

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