6 Key Insurance Risks Businesses Should Prepare for in 2026

As we step into 2026, companies are navigating a landscape filled with rapid changes, sharper challenges, and higher stakes. From costly legal battles to increasingly sophisticated cyberattacks, today’s risk environment is shifting faster than ever. Staying protected requires thoughtful planning, proactive risk management, and insurance coverage that evolves with emerging threats.

Below are six major risks businesses need to keep a close eye on this year.

1. Social Inflation and the Growth of Nuclear Verdicts

Legal judgments exceeding $10 million—often referred to as nuclear verdicts—are becoming more common, particularly in certain states. These outsized awards are pushing liability insurance premiums upward, making it more challenging for companies to secure affordable policies. This pattern, known as social inflation, is influenced by several factors, including third-party litigation funding, shifting attitudes among younger jurors, and emotional strategies used in court to persuade juries toward larger payouts.

Industries such as healthcare, transportation, and manufacturing are feeling the impact most intensely. While insurers are turning to artificial intelligence to better assess legal exposure and some states are evaluating reforms aimed at limiting extreme verdicts, the overall risk remains high. Social inflation continues to be one of the most unpredictable and expensive challenges businesses will face in 2026.

2. Cybersecurity Risks and AI-Enhanced Attacks

Cyber threats are growing more sophisticated as criminals adopt advanced tools—including AI-driven attack methods and ransomware-as-a-service models—to target organizations of all sizes. These attacks can lead to stolen data, operational shutdowns, and reputational damage. Even a single breach can trigger major financial losses, regulatory penalties, and legal complications.

Businesses must prioritize strong cyber hygiene to stay ahead. This includes implementing multi-factor authentication, using threat detection and response tools, training teams to recognize suspicious activity, and keeping software updated. Cyber insurance also plays a key role, though many policies now require organizations to meet specific security standards before obtaining coverage. Today, prevention and insurance must work hand in hand to effectively reduce cyber risk.

3. Climate-Driven Events and Natural Catastrophe Losses

Extreme weather events—from wildfires to hurricanes to severe flooding—are occurring more frequently and causing substantial damage. As a result, companies in high-risk regions are facing shrinking insurance availability and rising premiums. In some states, insurers are even withdrawing from certain markets altogether.

To better handle climate-related threats, many organizations are investing in resilient building designs, durable materials, and structural improvements that can help withstand catastrophic weather. Others are opting for innovative insurance options that pay out when predefined conditions—such as rainfall totals or wind speeds—are met. These parametric policies can accelerate recovery by eliminating lengthy damage assessments. Preparing for weather volatility is now essential for long-term business stability.

4. Supply Chain Challenges and Business Interruption

Global supply chain issues continue to disrupt business operations. Delays at major ports, material shortages, geopolitical tensions, and transportation obstacles can all make it difficult to maintain steady production and delivery schedules. Even companies not directly affected can be impacted if a critical supplier or logistics partner experiences problems.

To reduce exposure, many businesses are turning to specialized insurance designed to cover losses tied to supply chain breakdowns. These policies may offer protection for issues such as shipping delays, supplier failure, or cyber incidents affecting logistics networks. The right insurance can provide a vital buffer when external events cause operational slowdowns.

5. Complex Regulations and Evolving Compliance Requirements

New laws and regulations are emerging rapidly, especially in areas like environmental standards, data privacy, and corporate sustainability reporting. These changes create added responsibilities—and increased exposure—for companies that may struggle to keep up.

Privacy laws such as the California Consumer Privacy Act (CCPA) are prompting organizations to improve how they manage and secure personal information. Meanwhile, European regulations are expanding consumers’ rights to pursue legal claims. Insurance carriers are also dealing with heightened regulatory pressure, which can influence how policies are structured and what exclusions are included. Regular policy reviews are essential to ensure coverage aligns with new legal expectations and does not leave hidden vulnerabilities.

6. Technology-Related Operational Risks

As companies adopt more digital tools—ranging from artificial intelligence systems to cloud platforms and automation technologies—they’re also encountering new sources of operational risk. Technical glitches, AI errors, and system outages can lead to costly downtime, service disruptions, or potential liability concerns.

Some insurers now provide coverage specifically for technology failures or disruptions. Still, businesses must remain diligent by keeping systems updated, ensuring security controls are in place, and using emerging technologies responsibly. Blending comprehensive insurance protection with strong digital risk management practices can help reduce the likelihood of tech-driven setbacks.

Prepare for a More Complex 2026

The challenges businesses face in 2026 are interconnected, and one issue can quickly lead to another. Staying prepared requires consistent policy reviews, evolving risk management strategies, and awareness of newly emerging threats. With the right planning, organizations can strengthen their resilience and stay ahead in an unpredictable environment.

If you’d like help reviewing your coverage or identifying potential gaps, give us a call to schedule a risk review tailored to your business and industry.