The data: US property and casualty insurers have had an exceptionally strong year so far. The industry generated $31.2 billion in net underwriting income during the first six months of the year, nearly triple the $10.9 billion recorded a year earlier, according to AM Best. 

Lower catastrophe losses helped. Catastrophes added 6.2 percentage points to insurers' combined ratio, down from 10.8 points in H1 2025, when the California wildfires weighed heavily on results, per AM Best. 

Stronger underwriting results, alongside a 12% increase in net investment income, nearly doubled insurers’ pre-tax operating income to $79.1 billion, per AM Best. Higher realized capital gains provided another boost, helping net income rise 55% YoY to $77.8 billion.

But the favorable loss environment could be tested by a potential Super El Niño—NOAA put the probability of a very strong event this fall and winter above 90%.

Why it matters: P&C insurers' strong H1 2026 performance gives them a cushion heading into an environment with heightened risk.

El Niño doesn't necessarily mean overall catastrophe losses will surge. No Atlantic hurricane has formed in 2026 as of writing—breaking a 112-year record, per Accuweather. 

But it can concentrate and redistribute risks in certain regions—for example, California, New England, and southern US states will see the most wet-weather impacts such as heavy rain and flash flooding, per The Weather Channel, and other regions could get heavy snowfall. That makes the coming months a test of whether insurers' catastrophe models, pricing, and exposure management are prepared for a more intense mix of weather-related events in those regions.

Implications for insurers: Insurers are using AI and more sophisticated climate models to incorporate weather, property, and geographic data into risk assessments, but those tools need to adapt to conditions beyond what insurers have previously experienced.

That makes the coming months a real-world stress test. If models underestimate where losses emerge or how severe they become, insurers may need to revisit pricing, underwriting appetites, and exposure concentrations heading into 2027—even after starting 2026 with some of their strongest results in years.

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