6 Key Insurance Risks Businesses Should Prepare for in 2026

As we move into 2026, organizations are navigating a business landscape that feels more unpredictable than ever. From escalating legal judgments to rapidly evolving cyber threats, the challenges facing companies continue to grow more complex. Planning ahead and maintaining the right insurance protection can be the key to staying resilient in an uncertain environment.

Below are six major risks that every business should keep an eye on this year:

1. Social Inflation and Increasing Nuclear Verdicts

Jury awards exceeding $10 million—often called nuclear verdicts—are appearing more frequently, particularly in certain states. These massive payouts are pushing liability insurance premiums higher and making adequate coverage harder to secure. The broader trend, known as social inflation, is influenced by factors like third-party litigation funding, shifting attitudes among younger jurors, and courtroom strategies designed to drive up settlement amounts.

Industries such as healthcare, transportation, and manufacturing are experiencing the greatest impact. While some insurers are turning to artificial intelligence to help anticipate legal exposure and mitigate potential losses, lawmakers in several states are evaluating policies aimed at curbing extreme jury awards. Even with these efforts underway, social inflation remains one of the most costly and unpredictable risks in 2026.

2. Cybersecurity Pressures and AI-Enhanced Attacks

Cybercriminals are becoming more sophisticated, leveraging tools like AI-driven attacks and ransomware-as-a-service to target businesses of all sizes. These attacks can lead to data theft, operational shutdowns, and long-term reputational harm. For many businesses, just one breach can result in major financial consequences—from regulatory fines to legal claims.

Strong security measures are essential. Companies should implement multi-factor authentication, maintain real-time threat detection systems, train employees regularly, and keep software patched. Cyber insurance also plays a critical role, but insurers now expect organizations to meet certain security benchmarks before offering or renewing a policy. Effective protection now depends on both prevention and proper insurance coverage.

3. Natural Catastrophes and Climate-Driven Damages

Climate-related disasters—including floods, wildfires, and hurricanes—continue to grow in frequency and severity. As losses rise, many businesses located in high-risk regions are struggling to maintain property insurance or are facing substantial premium increases. In extreme cases, some insurers are withdrawing from particularly vulnerable markets altogether.

To better manage these exposures, companies are strengthening their buildings with resilient materials, updating designs to withstand severe weather, and using specialized insurance solutions. One type, parametric insurance, provides payouts based on measurable triggers such as wind speeds or rainfall levels, allowing businesses to recover more quickly without waiting for damage assessments. Preparing for severe weather events is becoming a fundamental part of long-term business planning.

4. Supply Chain Strain and Business Interruption Challenges

Global supply chain instability remains a major source of disruption. Whether due to port congestion, raw material shortages, or geopolitical conflict, delays can impact production timelines and customer delivery—even when a company’s own operations are functioning normally. A single supplier issue can halt business activity and result in significant financial losses.

To counter these vulnerabilities, many organizations are turning to specialized insurance options that address indirect disruptions. Coverage may include protection for supplier breakdowns, trade interruptions, or cyberattacks affecting logistics partners. With the right policies in place, businesses can keep operations moving even when external issues create roadblocks.

5. Evolving Regulations and Increasing Legal Complexity

Regulatory requirements are shifting rapidly, particularly around data privacy, environmental impact, and sustainability reporting. As new rules emerge, businesses face growing compliance costs and an increased risk of penalties or lawsuits if they fall behind.

Legislation such as the California Consumer Privacy Act (CCPA) is raising expectations for data handling and transparency. Meanwhile, expanded consumer rights in Europe and other regions are creating additional legal exposure. Insurance carriers are also navigating tighter regulations, which may influence what is covered in future policies. For businesses, regularly reviewing insurance coverage is essential to ensure there are no hidden gaps tied to changing rules.

6. Technology-Driven Risks and Digital System Failures

The widespread adoption of technologies like artificial intelligence, automation, and cloud-based tools has streamlined operations but also introduced new vulnerabilities. Technical failures, software issues, or incorrect outputs from AI systems can lead to service interruptions, inaccurate decisions, and even legal disputes.

Insurers are responding with policies designed to cover system outages and other technology-related losses. However, companies must still take proactive steps—such as securing digital platforms, keeping systems updated, and implementing responsible-use practices. Balancing strong digital risk management with appropriate insurance can help prevent costly setbacks.

Prepare for a Complex 2026

The challenges businesses will face in 2026 are deeply interconnected, and one disruption can quickly trigger another. That’s why thoughtful planning and routine insurance evaluations are more crucial than ever. Staying informed, strengthening risk strategies, and addressing potential gaps early can help ensure your business remains secure and resilient.

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