The Super El Niño Effect on insurance and what it means for clients

Forecasters are warning that Super El Niño is expected to make its debut soon and will likely continue through winter and early 2027, according to the National Oceanic and Atmospheric Administration.

Though Atlantic hurricane activity may be reduced, insurance carriers will still feel its impacts.  Elevated losses from flooding, severe convective storms, winter storms, wildfires, and mudslide exposure are currently top of mind.

For clients in high-risk states like Florida, Oklahoma, Mississippi, Louisiana and Nebraska, Super El Niño could make securing affordable home insurance coverage even more difficult than it already is.

Why home insurance costs may skyrocket

Beth Swanson, insurance analyst at The Zebra, explained that the average annual home insurance premium in the United States is now $2,966, almost a 6% increase from 2025, but this figure varies widely based on factors such as a home’s age and condition, value and location.

With climate risks on the rise, many homeowners in high-risk states are paying more than $5,000 a year for home insurance.

“Depending on how severe this El Niño turns out to be, more private insurers may proactively exit volatile regions. That will leave homeowners (and advisors) with fewer options and higher prices,” Swanson said.

As an advisor, view the potential Super El Niño as an accelerant on an already stressed homeowners' insurance market, rather than a single, unexpected concern, experts say. By doing so, you can effectively help clients navigate the complexity the situation may bring, just like advisors are already doing in California.

Which clients are at risk

Of course, certain homeowners may feel the impacts of Super El Niño more than others.

Those with coastal properties, especially in the south, wildfire-exposed homes, as in California, older homes, properties with aging roofs, and homes in flood-prone areas, as in Louisiana, are especially vulnerable.

“During El Niño, the Southern U.S. can see wetter conditions, while other regions may see different patterns that affect wildfire, flooding, or storm exposure,” explained Richard Estrella, director of operations at Estrella Insurance.

Swanson also points out the high risk for homes on a slab or those without basements or crawlspaces. They’re especially prone to flooding during El Niño downpours and may face erosion.

Insurance companies constantly look at predictive models and use the latest data available to determine these so-called hot spots. As an advisor, it’s a good idea to get familiar with them. Then, reach out to your clients in these areas to come up with a game plan.

Preparation and education are key

Preparing homeowners for potential rate increases is never a fun conversation.

“However, it can save you from having a frustrated homeowner reacting negatively at renewal time, or after a claim when their wallet is feeling it,” Swanson explained.

During your conversations, shed light on deductibles and how they may affect a client.

“Plenty of homeowners, especially first-time buyers, don't fully grasp how percentage deductibles work, so we have to break it down clearly ahead of time,” Estrella said.

For example, if a client has a 5% storm deductible on a $400,000 house, they're looking at shelling out $20,000 out of pocket. They need to know that before the storm hits.

“As licensed agents, we know the ins and outs of this, but clients rarely look at their coverage until something bad, like Super El Niño happens. By then, it's too late,” Estrella explained.

Also, homeowners living 50 miles inland often assume they're totally safe, but they can still face severe flash flooding or tornado damage. Hurricane Helene and the damage it caused inland is an example.

While it seems obvious to those in the industry, many consumers still don't realize that standard home policies exclude flood damage. Most homeowners just assume their insurance covers any emergency.

“If we don't explicitly educate them on the differences, it leads to a lot of anger, confusion, and a terrible financial experience if they find out too late that water damage isn't universally covered,” Swanson said.

Why is it not only about affordability

With Super El Niño approaching, advisors say the conversation should shift from “How do we get the lowest premium?” to “How do we protect the balance sheet responsibly?”

“That may mean using deductibles strategically, removing unnecessary endorsements, improving the risk profile of the home, bundling where appropriate, and shopping across admitted and non-admitted markets when necessary,” said Michelle Youshock, head of personal lines of World Insurance Associates.

Fortunately, many programs help homeowners obtain loans to purchase and install hurricane-resistant windows, doors and roofs.

“These upgrades can lower home insurance costs dramatically and give clients access to more insurance companies,” Estrella said.

Remember, the goal is to help the client make an informed decision and that doesn’t always mean chasing the cheapest premium.

“Sometimes the lowest price creates the biggest problem after a claim," Estrella said. "Clients need to understand the tradeoff between affordability and protection, especially as carriers continue tightening guidelines and shifting more risk back to the homeowner."

Ultimately, the advisors who proactively educate clients on coverage gaps, mitigation strategies, and long-term affordability concerns are more likely to build long-term trust and help homeowners avoid costly surprises.

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Anna Baluch is a finance reporter and writer with more than a decade of experience. Contact her at [email protected]