6 Key Insurance Risks Businesses Need to Prepare for in 2026

As 2026 gets underway, companies are navigating a landscape filled with fast‑moving challenges and growing uncertainty. Legal pressures, cyberattacks, climate‑driven disasters, and technology failures are creating new vulnerabilities for organizations of all sizes. Staying proactive and ensuring your insurance coverage keeps pace with these changes is crucial for long‑term stability.

Below are six emerging risks that businesses should keep on their radar this year.

1. Social Inflation and the Growth of Massive Jury Awards

In many states, court cases involving large companies are resulting in jury awards of $10 million or more, often referred to as nuclear verdicts. These extraordinary payouts are becoming more common, and as a result, liability insurance has become more expensive and harder to secure.

This pattern—known as social inflation—is being fueled by several factors. Litigation funders are increasingly backing lawsuits in hopes of big returns. Younger jurors often view corporations with greater skepticism. And trial strategies designed to appeal to emotion are leading to higher settlements.

Industries such as healthcare, automotive, and manufacturing are experiencing the heaviest impact. While insurers are turning to artificial intelligence to forecast legal exposure and some states are exploring legislation to limit excessive awards, the problem remains one of the most unpredictable financial threats companies will face in 2026.

2. Cyber Risks and AI‑Enhanced Attacks

Cybercriminals are using more advanced tools than ever before. With everything from automated ransomware platforms to AI‑generated phishing schemes, today’s attacks are faster, smarter, and harder to detect. A single breach can lead to significant downtime, regulatory penalties, and reputational damage.

To stay protected, companies need to strengthen their cybersecurity foundation. That means implementing multi‑factor authentication, investing in threat monitoring tools, and making cybersecurity training part of regular employee development. Keeping software updated is essential, too. Cyber insurance remains an important buffer—but more insurers now require strict cybersecurity standards before issuing coverage. Being proactive is no longer optional.

3. Climate‑Related Events and Escalating Property Losses

Extreme weather events—including hurricanes, wildfires, and flooding—are happening more frequently and causing greater destruction. For businesses in vulnerable regions, this can lead to rising insurance premiums and, in some cases, difficulty finding property coverage at all. Some insurers are choosing to reduce their exposure or leave certain markets entirely.

To counter these risks, many organizations are reinforcing their facilities with stronger materials, improved building methods, and designs better suited to withstand natural disasters. Others are turning to innovative insurance options, such as parametric policies that pay out automatically when specific conditions—like wind speeds or rainfall levels—are met. These policies speed up recovery by eliminating lengthy inspections. Preparing for extreme weather has become a necessary part of strategic planning.

4. Supply Chain Breakdown and Business Interruption

Global supply chains continue to face disruptions driven by material shortages, transportation delays, and geopolitical tensions. Even when a business’s own operations remain intact, problems within a supplier’s network can create costly interruptions.

To guard against these uncertainties, companies are securing specialized insurance that protects revenue when supply chain partners experience outages or delays. This includes coverage for transportation issues, manufacturing breakdowns, or even cyber incidents affecting logistics vendors. The right policies can help keep operations running—and reduce the financial shock—when external factors cause slowdowns.

5. Shifting Regulations and Increased Legal Requirements

Regulatory changes around data privacy, environmental practices, and sustainability reporting are adding new layers of complexity for businesses. Requirements like the California Consumer Privacy Act (CCPA) demand stronger data‑handling standards, while countries in Europe are rolling out rules that make it easier for consumers to sue organizations that mishandle personal information.

Insurance carriers are also facing tougher oversight, which may influence how policies are written—sometimes creating new exclusions or altering coverage terms. That’s why regular policy reviews are essential. Businesses need to ensure their insurance still aligns with evolving laws and that gaps in compliance are quickly addressed.

6. Technology‑Based Operational Risks

More companies are embracing automation, cloud platforms, and artificial intelligence to streamline operations. While these technologies unlock efficiency, they also introduce new risks. An outage in a critical system, a flawed AI recommendation, or a software malfunction can trigger costly mistakes or operational downtime.

Some insurers now offer coverage tailored to tech‑related failures, but businesses still need strong internal safeguards. Regular system updates, secure data management, and thoughtful oversight of AI tools are essential. A balanced approach—pairing smart risk management with appropriate insurance coverage—can help prevent digital missteps from becoming expensive setbacks.

Preparing for a Complex Year Ahead

The challenges businesses face in 2026 are connected in ways that can compound risk. A cyber incident can lead to regulatory violations. A climate disaster can disrupt supply chains. A lawsuit can reshape insurance availability. That’s why staying informed, reviewing your policies regularly, and strengthening your risk management strategy are more important than ever.

If you’d like help reviewing your insurance options or identifying areas where you might be under‑protected, we’re here to help. Give us a call to schedule a personalized risk assessment tailored to your business and industry.