Crops enter risky season as El Niño intensity forecasts climb.

Loss adjuster Crawford & Company has warned that a "super El Niño" could damage UK crop yields through a combination of drought, flooding and disrupted growing conditions, according to a report published this week.

El Niño is a periodic warming of surface waters in the tropical Pacific that shifts global weather patterns far beyond the ocean itself, and past strong episodes have been linked to wetter, more unsettled conditions across parts of the UK - the mechanism underlying Crawford's warning for this year's harvest.

The report, Super El Niño – Potential Impacts for Agriculture in the UK, said excessively wet conditions may hinder crop establishment, increase soil erosion and nutrient loss, and drive up feed costs for livestock producers. From an insurance perspective, these factors may lead to longer-tail losses, increased claims costs and greater pressure on margins, particularly where policies respond to yield shortfalls or input cost volatility.

Intensity forecasts rise amid strained sector

Reinsurance broker Gallagher Re's H1 2026 Natural Catastrophe and Climate Report, published this month, confirmed El Niño conditions have officially arrived, with the US National Oceanic and Atmospheric Administration indicating at least a 63% chance of "very strong" intensity by year-end. The broker added that as the industry approaches peak tropical cyclone season, the phenomenon is expected to strengthen further during the second half of 2026. The update follows the World Meteorological Organization's earlier estimate of an 80% chance that El Niño conditions would emerge between June and August.

The National Farmers Union has warned members to prepare for drought conditions extending into 2026, after the Environment Agency flagged that a dry winter could worsen an already stretched water position, with reduced grass growth and lower yields expected for crops such as onions and potatoes. That warning follows a record £307 million subsidence payout in 2025 after the UK's hottest summer on record, itself following a £219 million payout in 2022, according to figures from the Association of British Insurers.

Winter wheat condition across the UK fell to 58% good or excellent by late June, down from 64% a month earlier after a dry spring, according to data from the Agriculture and Horticulture Development Board (AHDB). The deterioration underscored pressure on lighter soils ahead of the main August wheat harvest. Winter oilseed rape fared better, with 78% rated good or excellent in late May, compared with 52% a year earlier.

Crawford said this pattern of stressed baseline conditions is central to the risk. UK farming is already emerging from a period of prolonged dryness followed by exceptionally wet weather, leaving soils stressed, water reserves depleted and overall resilience reduced, the report said, adding that this can heighten vulnerability across insured portfolios and increase the likelihood of repeat claims within short timeframes.

Compound weather seen as key threat

A central concern in the Crawford report is the growing likelihood of compound weather events, where drought and flooding occur within the same season. Crawford said farms could see drought-related reductions in crop yields followed by flood-related physical damage within a single policy period, significantly increasing both the severity and complexity of claims, creating challenges for underwriters as multiple loss drivers converge within one claim lifecycle.

Andrew Shaw, Crawford's head of Agriculture, UK & Ireland, said the risk to production would build cumulatively rather than from a single event. "The impact of a super El Niño on UK agricultural claims is unlikely to be driven by a single weather event," he said. "Instead, it is the interaction between threshold-driven crop responses, sequential weather extremes and wider system pressures that creates a heightened and multi-dimensional risk for UK farming."

Yield recovery forecasts predate the dry spring

UK wheat production had been forecast to recover to 13.5 million tonnes in the 2026/27 marketing year, up from an estimated 12.3 million tonnes, with average yields projected to rise to about 7.94 t/ha, according to the US Department of Agriculture's Foreign Agricultural Service. The forecast, published in May, assumed no prolonged spring or early summer drought and therefore predated this year's dry spring. AHDB's estimated 2025 GB wheat yield of about 7.6 t/ha remains the latest harvest benchmark pending official 2026 harvest data.

Crawford recommended farms act ahead of any escalation. Strengthening drainage infrastructure, maintaining flexible cropping plans and reviewing input sourcing strategies can help farms prepare for potential operational and financial challenges, while supporting more effective risk transfer, the report said.

Source - https://www.insurancebusinessmag.com