An evolving catastrophe landscape
Around the world, hurricane and flood damage remains one of the most significant drivers of weather-related loss. But global heating is not just creating more weather; it is shaping the very conditions in which weather forms. As oceans warm, they provide additional energy to tropical weather systems. At the same time, warmer atmospheres are capable of holding greater volumes of moisture. These factors are reshaping long-established weather patterns, and increasing the potential for extreme events. At the same time, and despite the risk, people, assets, and critical infrastructure continue to flock to exposed locations. Together, these changes are redefining organizational exposure, as historical assumptions become increasingly unreliable indicators of future risk.
Recent years have seen significant shifts in the patterns of storm formation around the globe. While global heating is not thought to be increasing the frequency of tropical cyclones, there is broad consensus that it is making the storms that do form stronger, wetter, and more extreme. For businesses, this distinction is important: losses are not driven by the number of storms in a season, but by the intensity and location of individual events. According to the Verisk Cat Risk Report 2026, the insurance industry’s annual average global catastrophe loss benchmark increased to $171 bn, driven largely by inflation, property value growth, and exposure expansion. Remarkably, this is despite 2025 seeing no US hurricane landfalls – the first such year in a decade.
Risk managers have long understood that a single event can reshape an entire market. Hurricane Andrew, which struck Florida in 1992, remains one of the most consequential natural catastrophes in insurance history, despite occurring during a below-average season. Today, however, the concentration of values in areas such as Miami and Tampa are significantly higher than three decades ago. Catastrophe scenarios that involve a major hurricane striking South Florida continue to rank among the most significant loss events modelled by the insurance industry, with potential insured losses comfortably exceeding US$100 billion. These shifts are unveiling across the globe, with population growth is increasingly concentrated in urban areas exposed to climate hazards, while more homes, businesses and critical infrastructure are being built in the paths of hurricanes, floods, and severe storms.
The El Niño effect
The interaction between global heating and natural climate cycles adds another layer of complexity. El Niño, the periodic warming of sea-surface temperatures across the equatorial Pacific, has long influenced weather patterns around the world. Its effects extend across drought, rainfall, storm formation, agricultural production, and wildfire activity, often influencing several continents simultaneously.
The impacts of El Niño are varied. Strong El Niño years tend to increase drought and wildfire risks across parts of Australia, south-west Africa, and Central America, while increasingly the likelihood of heavy rainfall and flooding in South America. The phenomenon also influences tropical cyclone activity, leading to more intense and persistent storms over parts of East Asia, but tends to depress the North Atlantic hurricane season. In 2026, a so-called ‘super-El Niño’ is expected to be the strongest ever recorded, which could push temperatures even higher, breaking records and leaving damage along the way.
But El Niño isn’t only the driver of climate change; the phenomenon is itself evolving in response to a hotter globe. Increasingly, researchers are examining whether global heating is amplifying natural climate oscillations, creating more extreme versions of familiar weather patterns. If so, organizations face a double challenge: adapting not only to a warming climate, but also to changes in the natural systems that shape global weather. For risk managers, the result is greater uncertainty, and a reduced ability to rely solely on historical precedents when planning for future conditions.
Chile salmon farming
While hurricane season often dominates El Niño-related headlines, rising sea temperatures are already affecting South America’s aquaculture industry. Chile – the globe’s second largest producer of salmon – is set to experience a precipitous decline in salmon production for 2026.
El Niño’s ability to elevate ocean temperatures and increase water column stratification has created conditions conducive for harmful algal blooms. Warmer seawater relinquishes its capacity to retain dissolved oxygen, enabling algae to proliferate and, as part of a vicious cycle, further deplete oxygen levels. Low oxygen concentration can suffocate farmed salmon and distort wider marine ecosystems.
This disruption manifests in anchovy stocks migrating away from their traditional habitats. In Peruvian waters, this has forced authorities to suspend anchovy fishing. The absence of anchovy – a vital component of fishmeal – has resulted in an increase in the price of aquafeed. A dearth in aquafeed consequently increases the cost of salmon farming and places additional pressure on producers already battling algal blooms.
The consequences for Chile’s aquaculture sector can be severe – similar conditions in 2016 led to harmful algal blooms and the deaths of 100,000 tonnes of farmed salmon. Around 37 production sites were affected, generating an estimated US$800 million in losses.
After the storm, the flood
While hurricanes often dominate headlines, in many major weather events it is not the wind that causes the greatest losses, but the water that follows. Surface-water flooding is a particular concern. Prolonged dry periods harden the ground, reducing its ability to absorb rainfall. When intense rain arrives, water runs rapidly across the surface, overwhelming drainage systems and urban infrastructure. In 2021, flooding in London’s Portobello Road affected approximately 300 properties, including market stalls, restaurants, and retailers. The resulting claim settled for roughly £5.6 million, demonstrating how a single flood event can simultaneously affect large numbers of small and medium-sized businesses.
Beyond extensive property damage, floods create significant operational disruption. Roads become impassable, utilities fail, and infrastructure is damaged. Employees may be unable to travel to work. These effects often prolong losses long after the insured premises become accessible again. In 2024, the arrival of Storm Boris triggered significant damage across parts of central and eastern Europe. The resultant floodwaters inundated an agricultural manufacturing facility in Austria, leading to damage of approximately €10 million to inventory, machinery, plant and equipment. Contamination made restoration difficult or impossible, and increased replacement requirements. Investigations later identified deficiencies in local drainage and site infrastructure, illustrating how vulnerabilities in the built environment can magnify the consequences of natural hazards.
Flood risk is also expanding into less familiar territory. Earlier in 2026, intense rainfall overwhelmed infrastructure across parts of the Middle East, with typically arid Arabian peninsula receiving up to 150mm of rain in just a few days. Mitigating these floods is made more challenging by the fact that such regions often lack the catastrophe reporting and modelling services typical of more flood-prone destinations, such as Europe or North America. In turn, this makes it more difficul to quantify risk and compare losses over time.
Losses are not driven by the number of storms in a season, but by the intensity and location of individual events.
Coastal flooding presents an additional problem. Elevated sea levels and higher frequencies of storm surges are increasing exposure for ports, logistics hubs and coastal communities. In August 2026, Typhoon Dolphin generated offshore waves of up to 15 meters along parts of China’s eastern seaboard, disrupting operations at major ports including Shanghai and Ningbo. Although vessels could be sheltered inland, the floods caused significant damage to cargo stored at the ports. These losses frequently continue even after floodwaters recede, as saltwater contamination accelerates corrosion, damages electrical systems, and renders equipment of infrastructure unusable, even where not visibly damaged.
New perils and new models
At the same time, the industry’s understanding of catastrophe risk is evolving. Today, so-called secondary perils, including severe convective storms (SCS), hail, tornadoes and flash floods, are becoming some of the market's largest loss drivers. In North America, thunderstorms were among the largest contributors to insured catastrophe losses during the first half of 2026, while severe convective storms in Queensland and New South Wales generated approximately AUD 1.5bn in insured losses during the 2026 financial year.
These hazards remain difficult to model. Unlike hurricanes, which benefit from decades of historical data and increasingly sophisticated catastrophe models, hailstorms, flash floods and tornadoes are often highly localized: one facility may suffer catastrophic damage, while a neighboring property escapes largely unscathed. As a result, insurers and risk managers are placing greater emphasis on forward-looking modelling, exposure mapping and scenario analysis as they look to quantify future risk.