6 Key Insurance Risks Businesses Should Prepare for in 2026

The start of 2026 brings a fresh wave of challenges for companies of all sizes. Economic uncertainty, rapid technological change, and evolving legal pressures are reshaping the risk landscape in ways that demand careful attention. With the right insurance strategy and proactive planning, businesses can stay resilient—even when the unexpected hits.

Below are six emerging risks that organizations should keep top of mind this year.

1. The Growing Impact of Social Inflation and Nuclear Verdicts

Large jury awards—those reaching $10 million or more—continue to rise across the country. These so-called nuclear verdicts are becoming increasingly common, particularly in industries that are already vulnerable to litigation. As a result, liability insurance costs are climbing, and some businesses are struggling to secure adequate coverage.

This rise in social inflation is influenced by several factors, including third-party funding of lawsuits, younger jurors who tend to distrust corporations, and courtroom strategies that evoke emotional responses to push for higher payouts. Industries such as healthcare, manufacturing, and automotive are facing the highest exposure.

To counteract these trends, some insurers are turning to artificial intelligence to better evaluate legal risks, while lawmakers in various states are exploring reforms aimed at curbing excessive verdicts. Even so, social inflation remains one of the most volatile and expensive risks heading into 2026.

2. Cybersecurity Risks and the Evolution of AI-Driven Attacks

Cyberattacks are becoming more advanced, more automated, and more damaging. Criminals now rely on AI-driven tools and ransomware-as-a-service platforms that make it easier to carry out complex attacks. These incidents can halt business operations, compromise sensitive data, and trigger costly legal and regulatory consequences.

To stay protected, companies must take a multilayered approach to cybersecurity. Measures like multi-factor authentication, continuous threat monitoring, routine staff training, and consistent software updates are essential. Cyber insurance also plays a crucial role—but most policies now require organizations to meet strict security standards before coverage applies. In today’s environment, cyber prevention and cyber insurance work hand in hand.

3. Natural Disasters and Rising Climate-Related Losses

Extreme weather events—wildfires, hurricanes, flooding, and severe storms—are increasing in frequency and severity. This heightened activity is putting pressure on property insurance markets, especially in regions prone to climate-related disasters. In some areas, insurers have reduced coverage, raised premiums significantly, or exited the market entirely.

Many businesses are responding by improving building resilience through stronger construction materials, flood-resistant designs, and wildfire-safe landscaping. Others are exploring innovative insurance options, such as parametric policies that pay out when specific conditions are met, like wind speed or rainfall levels. These solutions can speed up recovery by eliminating lengthy damage assessment processes. Preparing for extreme weather is no longer optional—it’s a core part of long-term business planning.

4. Ongoing Supply Chain Challenges and Business Interruption Risks

Disruptions to the global supply chain continue to be a major concern. Delays at ports, shortages of critical materials, and geopolitical conflicts can interrupt production and distribution—even when a company is not directly impacted. These indirect disruptions can cause significant financial strain and operational downtime.

To reduce exposure, many businesses are turning to insurance products designed specifically for supply chain instability. These may include coverage for disruptions tied to key suppliers, transportation delays, geopolitical complications, or cyberattacks affecting logistics partners. With the right protections in place, companies can better withstand external shocks that might otherwise halt operations.

5. Increasing Regulatory Requirements and Legal Complexity

Regulatory environments are shifting rapidly, particularly in areas like data privacy, environmental compliance, and sustainability reporting. New and expanding requirements introduce potential fines, operational costs, and legal liability for companies that fail to stay ahead of changes.

Regulations such as the California Consumer Privacy Act (CCPA) have set a higher bar for privacy expectations in the U.S., while emerging European laws are giving consumers greater legal recourse. Insurers themselves are also adjusting to heightened regulatory scrutiny, which may influence how future policies are written and priced.

To avoid unexpected coverage gaps, businesses should routinely review their insurance policies to confirm that exclusions or outdated terms don’t leave them exposed to evolving compliance risks.

6. Technology-Driven Operational Failures

Digital transformation continues to accelerate, with organizations increasingly relying on artificial intelligence, automation, and cloud-based platforms. While these tools drive efficiency, they also introduce new vulnerabilities. A malfunctioning algorithm, a system outage, or a software failure can disrupt operations, damage customer trust, and lead to legal or financial fallout.

Some insurers now offer specialized technology coverage designed to protect against losses tied to system breakdowns or digital missteps. However, strong internal controls remain essential. Businesses must ensure their technology ecosystems are well-maintained, secure, and monitored—and that employees are trained to use these tools responsibly.

Preparing for 2026 and Beyond

The risks facing businesses today are increasingly interconnected. A cyber incident may trigger legal issues, a supply chain problem may lead to financial loss, and a natural disaster can spark operational and regulatory challenges all at once. Proactive planning, regular policy reviews, and strong risk management practices are key to staying protected in this evolving environment.

If you’d like support reviewing your coverage or identifying potential gaps, our team is here to help. Give us a call to schedule a customized risk review tailored to your business and industry needs.