Pacific Hurricane Risk in 2026 and What It Means for Your Insurance Program
The $900 Million Storm That Wasn’t Supposed to Happen
In August 2023, a hurricane made landfall on the Pacific coast of Mexico as a Category 4 storm. Within two days, its remnants had moved north across Baja California and into Southern California, Nevada, and Arizona. Roads flooded and businesses closed. The Phoenix metro area saw swift water rescues and California issued its first-ever tropical storm warning.
The storm was Tropical Storm Hilary. Total damage across the United States and Mexico exceeded $900 million.
Most of the businesses affected had never considered tropical storm exposure part of their risk profile. And many of them still don’t.
That is not a criticism. It is the logical result of how hurricane risk has been taught, communicated, and structured in the insurance market for decades. The Atlantic model dominates. Watch the Gulf Coast. Watch Florida. Watch the Carolinas. The Pacific coast is not on the map.
In 2026, that assumption is going to cost some businesses a significant amount of money. It does not have to cost yours.
2026 Is Different
Every June, brokers and risk managers run the same Atlantic hurricane prep playbook. In 2026, that reflex is pointed at the wrong ocean.
The reason comes down to El Nino. The climate pattern that develops when sea surface temperatures in the central and eastern Pacific rise above average has a predictable effect on both basins – and in 2026 those effects are working in opposite directions.
In the Atlantic
El Nino suppresses activity. It increases vertical wind shear across the tropical Atlantic, which disrupts developing storms before they can organize. Colorado State University forecasts the 2026 Atlantic season will be somewhat below normal – 13 named storms, 6 hurricanes, 2 major hurricanes, against long-term averages of 14, 7, and 3.
In the Eastern Pacific
El Nino does the opposite. Warmer water and reduced wind shear create more favorable conditions for storm development and intensification. AccuWeather forecasts 17 to 22 named storms in the Eastern Pacific in 2026, with 9 to 13 hurricanes and 4 to 8 major hurricanes – above the historical average on every metric.
The historical data makes this pattern reliable. Since 1990, even a moderate El Nino produced an above-average Eastern Pacific hurricane season 85 percent of the time. The 2026 El Nino is expected to be moderate to strong.
Mexico’s National Meteorological Service issued its first April forecast since 2015, predicting 18 to 21 named storms in the Pacific. The agency cited rising sea surface temperatures and reduced wind shear as the primary drivers – the same El Nino signature.
The bottom line: the Atlantic is quiet, but the Pacific is not. And the businesses most exposed to the Pacific are largely not paying attention.
Who Is Exposed
The common assumption is that Pacific hurricanes affect Mexico and Hawaii. That assumption was tested in 2023 – and it failed.
Direct landfalls on the California coast are rare. Ocean surface temperatures near shore are typically cool enough to weaken tropical systems before they arrive. But in 2026, those temperatures are expected to be warmer than normal, which means storms can maintain intensity farther north than usual before weakening.
More importantly, a storm does not have to make landfall in California to cause significant losses there. The Hilary model – a weakened tropical system pulling enormous amounts of moisture inland – is the exposure most Western U.S. businesses have never priced in.
The businesses with meaningful Pacific tropical exposure in 2026 include:
- Commercial real estate and property owners in Southern California, Arizona, Nevada, and Hawaii – flood, business interruption, and damage to building systems from sustained water intrusion.
- Construction projects in the Southwest – active job sites are particularly vulnerable to rapid water accumulation events that standard builders risk policies may not address.
- Agricultural operations in California’s Central Valley and the Salinas Valley – crop damage and equipment exposure from heavy rainfall and flooding.
- Energy infrastructure in the Southwest and offshore Pacific operations – flood, wind, and operational disruption exposure.
- Any business with Hawaii operations. AccuWeather projects above-average risk of direct tropical impacts on the islands in 2026, including damaging winds, flooding rain, and storm surge.
Hawaii’s situation deserves specific attention. The islands went through an extended period without a direct hurricane impact, which created a false sense of stability. Flash flooding from back-to-back Kona Low storms in early 2026 caused an estimated $2 billion in damage. The infrastructure is already stressed going into an above-average Pacific season.
Your Insurer is Paying Attention. Is Your Broker?
The Western U.S. property market is not in crisis. That is the point.
Named windstorm sublimits have been broadly issued across most Western property programs for years – that structure predates Tropical Storm Hilary and did not meaningfully tighten after it. The primary drivers of west coast property capacity constraints remain what they have been for the past decade: earthquake and wildfire. In the energy sector specifically, the property market is less restrictive today than it has been in years, with abundant capacity and manageable rate movement.
Hilary did not move the market, but it did move underwriters’ awareness.
The distinction matters. When a market reprices, your renewal reflects it automatically – you feel it in the quote. When underwriters become more aware of a risk class without yet repricing it, the adjustment shows up differently: more questions about flood mitigation, closer scrutiny of geographic concentration, increased interest in how a risk is presented rather than just what it looks like on paper. That is where the Western U.S. property market sits right now with Pacific tropical exposure.
The practical implication is not that your program is already inadequate. It may be perfectly structured for the risk environment of the last several years. The question is whether it has ever been evaluated against a Hilary-pattern event – a weakened tropical system that does not make California landfall but delivers sustained, damaging rainfall to inland markets – and whether the flood sublimits, named storm triggers, and business interruption structure hold up under that scenario.
Most haven’t been. Not because brokers were negligent, but because that conversation was never necessary. It is now.
The Coverage Gaps Most Western U.S. Programs Have Right Now
Standard commercial insurance programs in the Western United States were not designed with Pacific tropical risk in mind. That is not a flaw in the programs – it reflects the historical reality that tropical storm exposure in California, Arizona, Nevada, and inland areas was treated as negligible. In 2026, that baseline no longer holds. The gaps that matter most fall into four categories.
Named storm definitions and flood sublimits
Property programs commonly sublimit or exclude flood coverage in ways designed around Atlantic risk geography. A named storm that loses tropical status before reaching the California coast may not meet the named storm trigger in a standard policy – but the rainfall it produces can still cause significant losses. The question is whether your program covers the loss, not just the event as meteorologically classified.
This is not a hypothetical. In 2012, Hurricane Sandy made landfall on the New Jersey coast as a post-tropical cyclone, having formally lost hurricane designation before it hit. Insurers used that reclassification to contest hundreds of millions of dollars in claims, arguing that named storm triggers did not apply because the storm was meteorologically classified differently at the moment of landfall. Clients waited and brokers scrambled. Litigation followed. The damage was real; the coverage fight was over a single word.
Business interruption (BI) triggers and waiting periods
BI coverage is triggered by physical damage to property, and waiting periods – typically 72 hours – were designed around events with clear on/off damage profiles. A multi-day inland flooding event from a tropical remnant may cause sustained operational disruption that does not fit neatly into that structure. Businesses that have never modeled a five-day flooding event against their BI policy language are carrying risk they have not quantified.
Builders risk and course of construction
Active construction projects in the Southwest and California typically carry builders risk coverage structured around the region’s known perils – fire, earthquake, standard weather. Rapid water accumulation from a tropical moisture event is a different exposure profile. Job sites with open excavations, below-grade construction, or partially enclosed structures are particularly vulnerable.
The flood versus named storm distinction
Many programs treat flood and named storm as interchangeable perils under the same sublimit, but they are not. A tropical system that delivers significant rainfall to an inland market while classified as a post-tropical cyclone may not meet the named storm definition. This means flood sublimits, not named storm sublimits, govern the loss. For businesses in markets where flood has historically been a low-probability peril, those sublimits are often set low. Sandy established that distinction as a live claims issue – the Pacific version of that scenario is wetter, not windier, which means the flood sublimit is where the exposure concentrates.
None of these gaps are unique to any one insurer or program structure. They are the predictable result of Western U.S. programs being designed and priced for the risk environment of the last 20 years – not the one developing now.
Don’t Wait for the First Storm
The Eastern Pacific hurricane season officially began on May 15. The peak period runs from July through October. That window is enough time to have the right conversations and close the most significant gaps – but not if those conversations start at the next renewal. Four actions worth taking now:
Review your named storm and flood definitions
Pull your current property policy and read the named storm trigger language. Understand what event characteristics must be present for coverage to apply – and whether a Hilary-pattern event (tropical remnant, inland flooding, no California landfall) would meet that definition. If you do not know the answer, your broker should.
Stress-test your business interruption coverage
Model a three-to-five day operational disruption against your current BI policy. Identify the trigger, the waiting period, and the recovery period. If your BI coverage was never tested against a sustained flooding scenario, this is the time to find out where it holds and where it does not.
Audit your flood sublimits against current exposure
For businesses in Southern California, Arizona, Nevada, and Hawaii, flood sublimits that made sense three years ago may no longer reflect realistic loss scenarios. If your sublimit was set when Pacific tropical risk was treated as negligible, it may need to be revisited.
Do not wait for renewal
In an uneven market, renewal timing and program structure influence outcomes as much as pricing. As Pacific CAT scrutiny increases in the underwriting process, an early and well-prepared submission will be treated differently than a last-minute renewal request. The conversation is easier to have before the season peaks than after the first significant event.
One firm. No territories. No competing interests.
Most brokers who cover Western U.S. clients are organized by geography. The expertise needed to address Pacific CAT exposure across property, construction, agriculture, and energy sits in separate offices, serving separate clients, with no mechanism to bring it together for a single account.
Symphony Risk Solutions operates differently. No geographic territories or competing interests. When a client with property in Southern California, an active construction program in Arizona, and operations in Hawaii needs to understand how Pacific tropical exposure intersects across all three, the same team addresses all of it – not three teams each managing one piece.
This matters in a market where the risk is shifting. A broker organized by territory is optimizing their slice of your program, not the whole thing. That is a structural blind spot – and in a CAT market, blind spots are expensive.
If your current program has never been reviewed through a Pacific CAT lens, a 20-minute conversation will tell you whether it needs to be. Contact your Symphony Account Executive or build@symphonyrisk.com, or visit symphonyrisk.com.
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About Symphony Risk Solutions
Symphony Risk Solutions is a top-75 national specialty insurance brokerage with more than 150 employees, nine offices nationwide, and $500 million or more in premium placed annually. The firm operates across 13 specialty business units on a single consolidated P&L. Symphony Risk Solutions is licensed in all 50 states and places coverage with 130 or more insurers in 14 countries.