ENSO and agriculture: exploring the risks for insurance portfolios
This report explores the potential impacts of the El-Niño Southern Oscillation (ENSO) and its three phases (El Niño, La Niña and neutral) on agricultural production, and particularly its relevance to agricultural re/insurance portfolios. Its purpose is to serve as a useful reference for underwriters, actuaries, reinsurance buyers and brokers and provide insights on the potential impacts of El Niño and La Niña events on the agriculture re/insurance market.
For the Peruvian fishers who named it back in the 1500s, El Niño brought low-nutrient warm water pools to their coastline, gradually decimating their fish stocks. Centuries later, the ENSO climate phenomenon continues to concern farmers, food security experts and agriculture insurers due to its causal effect on droughts, floods, and extreme temperatures around the world. In 1983, the world experienced the most intense maize yield failure on modern record. Simultaneous harvest failures were recorded across several maize-producing regions. These impacts were driven by the 1982-1983 El Niño event, one of the most severe ENSO episodes in the past 150 years.