The Impact of El NiNo on Your Farm Insurance
El Niño has been declared, and that’s important to know for your farm insurance. The Bureau of Meteorology confirmed it in mid-June 2026, with forecasts pointing toward a strong to very strong event that may persist into 2027. If you farm in south-eastern Australia, you’ve probably already seen the headlines: drier winters (no sign of that in the South West!), elevated fire danger, tighter water allocations, and the prospect of a difficult season ahead.
This piece isn’t going to add to the noise. Instead, we want to look at what the data actually shows about how El Niño moves through the insurance system: what it tends to do to claims, what it can do to premiums, and what you should start thinking about now.
First: what El Niño reliably does to farm risk
Historical El Niño effects on south-eastern Australian agriculture are well-documented. The consistent pattern is drier winters and springs across the Murray-Darling Basin, warmer daytime temperatures, elevated fire weather, and earlier fire seasons. El Niño also increases the number of frost days in southern NSW and northern Victoria, as reduced cloud cover leads to colder overnight temperatures.
According to the BOM, nine of the ten driest winter-spring periods on record for eastern Australia have occurred during El Niño years. In the Murray-Darling Basin winter-spring rainfall averaged over all El Niño events since 1900 runs 28% below the long-term average. And while the severe droughts of 1982, 1994, 2002, 2006 and 2015 all coincided with El Niño conditions, it is also important to note that widespread drought does not result from every El Nino event.
The BOM has observed that “the frequency of high fire danger ratings and risk of a significant fire danger season in southeast Australia are significantly higher following an El Nino year, particularly when combined with a positive IOD event.” However, not all major fires follow El Nino years – with Black Saturday actually following a week La Nina (but positive IOD).
Across the broader farm sector, El Niño episodes correlate with an average decline in farm GDP of approximately 13%.
One important nuance: the strength of an El Niño event doesn’t reliably predict the strength of its agricultural impact. CSIRO researchers note that some of Australia’s worst droughts and fire seasons have occurred during relatively weak events. The 1997-98 El Niño was very strong but produced only moderate rainfall impacts, while the weaker 2002-03 event caused widespread, severe drought.
What the insurance data shows
Bushfire claims are amongst costliest event type in the system
The clearest signal in the insurance data is the relationship between bushfires and significant claims costs. NRMA Insurance’s NSW claims data going back to 2016 shows that the average cost of a bushfire claim is 69% higher than the next most costly category, which is flood.
The 2019-20 Black Summer, which unfolded during El Niño-associated conditions, generated $2.32 billion in insured losses with approximately 39,000 claims lodged. For the agricultural sector specifically, total losses (including uninsured losses) are estimated at $4-5 billion, or 6-8% of agricultural GDP, with more than 100,000 livestock killed (equating to approx. $2b), and millions of hectares of pasture and crop burned, alongside the property and equipment damage.
Premium data: What El Nino does to farm premiums
The ICA’s position on this is measured: premiums do not usually change solely in response to one weather event, but total catastrophe costs remain a key input to pricing and capital planning. In practical terms, this means an El Niño year that produces significant fire or storm losses will influence premium cycles in the years that follow.
What this means practically for your farm insurance right now
Check your sum insured against current rebuild costs
Underinsurance is the most widespread and least visible problem in Australian farm insurance right now. The cost of material and labour have increased significantly over the last few years, and if you are not reviewing those sums insured every year, the actual cost to rebuild may have moved well beyond your coverage limit.
Look at what your policy covers for farm continuation
Some farm packages include increased costs or loss of revenue cover. When triggered by an insured event, this cover can help with things like buying in feed if your pastures are burned or other additional costs of keeping your farm operating. This kind of cover, with the right sum insured, becomes particularly valuable in El Niño seasons where fire and dry conditions compound. It’s worth a specific conversation with your broker about exactly what triggers a claim and what the limits are, before the season rather than after.
Talk to your broker about your risk profile, not just your premium
Have a risk-based conversation with your broker as a premium management tool. Think through what the biggest financial risks to your operation are if we do enter another bad fire season and assess whether you are best using your insurance premium to safeguard against those risks. No insurance budget is limitless, but it is far wiser to understand where you need the most protection than to just cut cover and sums insured to blindly reduce costs.
Act Now
What we can say is that El Niño seasons increase the probability of fire-related claims, that those claims are amongst the most expensive in the farm insurance system, that premiums have already repriced significantly in response to recent catastrophe history, and that the farmers who tend to get through difficult seasons are the ones who understood their cover before the season started.
If you’d like to review your farm insurance ahead of this season, we’re here for that conversation. Our job is to make sure the cover you have is actually doing the job you think it is.
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