6 Emerging Insurance Risks Businesses Should Prepare for in 2026
As 2026 gets underway, companies are navigating a landscape filled with new challenges and fast‑shifting risks. From mounting legal pressures to increasingly sophisticated cyberattacks, the threats facing businesses today are evolving at a rapid pace. Staying ahead of these developments—and ensuring your insurance coverage keeps up—is essential for long-term resilience.
Below are six major risks that every organization should keep an eye on this year.
1. Escalating Social Inflation and the Growth of Nuclear Verdicts
Large jury awards—often exceeding $10 million—are becoming more common, and they're reshaping the liability insurance market. These massive payouts, often referred to as nuclear verdicts, are driving up claim severity and making it more difficult for businesses to secure affordable coverage. This rise is tied to what’s known as social inflation, a trend fueled by investor-backed litigation, shifting jury attitudes toward corporations, and trial strategies that appeal heavily to emotion.
Industries such as healthcare, automotive, and manufacturing continue to feel the greatest impact. While some insurers are turning to predictive analytics and artificial intelligence to better anticipate litigation trends, many states are also exploring new legislation aimed at curbing excessive verdicts. Even with these efforts, social inflation remains one of the most unpredictable and costly challenges of 2026.
2. Increasing Cybersecurity Risks and AI‑Enhanced Attacks
Cybercriminal activity is becoming both more aggressive and more technologically advanced. With tools like AI-generated phishing schemes, ransomware-as-a-service, and automated intrusion software, attackers can breach systems faster and with greater precision. For businesses, a single breach can lead to operational downtime, financial penalties, data loss, and significant reputational damage.
To reduce exposure, companies should focus on strengthening their cybersecurity posture. Key steps include enforcing multi-factor authentication, deploying detection and response systems, training employees to identify suspicious activity, and keeping software fully up to date. Cyber insurance can also offer a safety net—but many insurers now require businesses to meet specific cybersecurity standards before issuing coverage. Robust digital defenses and insurance protection now work hand in hand.
3. Climate-Driven Catastrophes and Rising Property Losses
Severe weather events—such as floods, hurricanes, and wildfires—are becoming more frequent and more destructive. This has made property insurance coverage harder to obtain, especially for businesses located in high-risk regions. In some areas, insurers are scaling back their presence or withdrawing from the market entirely due to repeated large losses.
To strengthen resilience, businesses are investing in structural upgrades that improve their buildings’ ability to withstand storms, water damage, or fire. Others are turning to parametric insurance solutions, which provide payouts based on clear triggers like rainfall totals or wind speed rather than traditional claims investigations. Faster access to recovery funds helps companies bounce back more quickly when disaster strikes. With climate volatility increasing, proactive preparation is essential.
4. Ongoing Supply Chain Strains and Operational Interruptions
Global supply chain instability continues to pose major challenges for businesses. Shipping bottlenecks, material shortages, geopolitical issues, and unpredictable delays can interrupt production and disrupt customer delivery schedules. Even when a company itself isn’t harmed, issues affecting upstream suppliers can still shut down operations.
To mitigate these risks, many businesses are purchasing specialized coverage that addresses interruptions caused by supplier disruptions or logistics breakdowns. This can include insurance for trade interruptions, cyber events affecting supply chain partners, or the sudden loss of a critical vendor. With the right insurance protections in place, companies can reduce downtime and maintain continuity even when external events create turbulence.
5. Rapid Regulatory Shifts and Growing Legal Complexity
Regulatory frameworks—particularly those focused on environmental practices, sustainability, and data privacy—are changing quickly. New requirements can create compliance pressures, financial penalties, and legal challenges for companies that aren’t keeping their policies and procedures current.
Rules like the California Consumer Privacy Act (CCPA) have increased expectations around data protection, while new EU regulations are making legal actions more accessible to consumers. Insurance carriers are also facing heightened regulatory scrutiny, which may influence how they evaluate clients and structure coverage. For businesses, reviewing policies regularly is crucial to ensure no important protections are missing or excluded due to updated laws.
6. Technology-Based Operational Risks in a Digital-First World
As companies deepen their reliance on cloud systems, automation tools, and artificial intelligence, new types of operational vulnerabilities are emerging. Technical failures, software outages, or inaccurate AI outputs can result in production delays, financial losses, or even legal complications.
Some insurers now offer products tailored specifically to technology-related disruptions, but coverage varies widely. Businesses must still take an active role in protecting themselves by maintaining secure systems, updating digital tools regularly, and developing responsible use practices for AI and automation. Combining strong technology management with the right insurance support can help prevent costly operational setbacks.
Preparing for a Complex 2026
The risks on the horizon for 2026 are deeply intertwined, and trouble in one area can quickly spill into another. That’s why strengthening risk management strategies and staying informed about emerging challenges is more important than ever.
Regularly reviewing your insurance portfolio, identifying potential gaps in coverage, and proactively updating policies can help your business remain resilient in a rapidly changing world. If you’d like assistance evaluating your protection or planning ahead for the year’s risks, we’re here to help.
Give us a call to schedule a risk review designed specifically for your business and industry.