6 Emerging Insurance Risks Businesses Should Prepare for in 2026

As 2026 gets underway, companies are stepping into a business landscape that feels more uncertain than ever. Legal pressures, digital threats, and environmental challenges are evolving quickly, making it essential for organizations to stay ahead of potential risks. Having the right insurance strategy in place can help businesses stay resilient, reduce exposure, and maintain long-term stability.

Below are six major risks businesses should keep an eye on this year, along with insights into why they matter and how organizations can better protect themselves.

1. Social Inflation and the Growth of Nuclear Verdicts

In recent years, lawsuits resulting in jury awards of $10 million or more—often called nuclear verdicts—have surged. These high-dollar judgments, especially common in certain states, are putting significant strain on liability insurance markets. The result? Rising premiums and more difficulty securing affordable coverage.

This trend, known as social inflation, has several drivers. Third-party investors are increasingly funding lawsuits, younger jurors are more skeptical of large corporations, and attorneys are using emotionally charged arguments that push juries toward larger awards.

Industries like healthcare, automotive, and manufacturing are experiencing the greatest impact. While some insurers are incorporating artificial intelligence to help forecast litigation outcomes and manage risk exposure, and lawmakers are exploring reforms aimed at limiting excessive jury payouts, the pressure of social inflation remains one of the most unpredictable challenges businesses must confront in 2026.

2. Evolving Cyber Threats and AI-Enhanced Attacks

Cybersecurity risks continue to escalate as criminals adopt more advanced tactics. Tools such as ransomware-as-a-service and artificial intelligence–driven attack methods enable bad actors to move faster, target more organizations, and cause greater disruption than ever before.

A single breach can lead to major financial losses, regulatory penalties, and damage to an organization’s brand. This makes strong cybersecurity practices essential. Today’s businesses need robust measures such as multi-factor authentication, threat monitoring tools, regular employee cybersecurity training, and consistent software updates.

Cyber insurance also plays a critical role in helping companies recover after an incident—but policies increasingly require businesses to meet specific security benchmarks before coverage is approved. In 2026, cybersecurity preparedness and insurance eligibility go hand in hand.

3. Climate-Related Disasters and Rising Property Losses

Severe weather events like hurricanes, wildfires, and floods are becoming more frequent and more destructive. This trend is making property insurance harder to obtain in high-risk regions and driving premiums upward. In some areas, insurers have even withdrawn from the market altogether due to unsustainable losses.

To address these challenges, many businesses are strengthening their facilities with more resilient construction materials and designs that can better withstand extreme weather. Others are turning to alternative insurance models, such as parametric policies that pay out based on measurable events like wind speed or rainfall totals. These options reduce processing delays and help organizations recover more quickly after a disaster.

Preparing for climate risk is no longer optional—it’s essential for business continuity.

4. Supply Chain Instability and Business Disruptions

Despite improvements in some areas, supply chain volatility continues to strain global operations. Material shortages, port congestion, geopolitical conflict, and infrastructure vulnerabilities all contribute to unpredictable delays and higher operational costs.

What complicates matters further is that a business can experience significant interruption even if the disruption occurs several steps away in the supply chain. For this reason, many companies are turning to insurance options designed specifically for supply chain disruptions, including coverage for supplier failures, trade interruptions, and cyber incidents that affect logistics partners.

Having the right insurance in place can help businesses maintain productivity, even when global challenges cause unexpected slowdowns.

5. Rapid Regulatory Changes and Compliance Burdens

New regulations are emerging at a rapid pace, especially in areas such as data privacy, environmental standards, and sustainability reporting. Organizations that fail to keep up may face substantial penalties, reputational damage, or costly lawsuits.

Examples include evolving privacy laws like the California Consumer Privacy Act (CCPA), which continues to tighten expectations around data handling. In Europe, rule changes are making it easier for consumers to file claims, adding even more compliance pressure for global companies.

The insurance industry itself is also adapting to new regulatory frameworks, which can affect how policies are written and what risks are excluded. As a result, businesses should routinely review their policies to ensure they’re fully protected and not overlooking new exposure tied to regulatory updates.

6. Technology-Driven Operational Risks

Businesses of all sizes are increasingly dependent on digital solutions—from cloud platforms and automation tools to artificial intelligence systems. While these technologies improve efficiency and streamline workflows, they also introduce new vulnerabilities. System outages, software failures, or flawed AI-generated decisions can create costly disruptions or legal complications.

Some insurers are now offering coverage specifically tailored to technology-related failures, but insurance alone isn’t enough. Companies must take responsibility for maintaining secure digital infrastructure, implementing regular updates, and ensuring that emerging technologies are used responsibly and with proper oversight.

Balancing innovation with risk management is critical in today’s digital-first environment.

Be Prepared for a Complex 2026

The challenges facing businesses in 2026 are increasingly interconnected. A disruption in one area—like a cyber incident or regulatory violation—can easily cascade into other parts of an organization. That’s why proactive planning and regular insurance reviews are so important.

By reassessing coverage, strengthening risk management strategies, and staying informed about emerging threats, businesses can better protect themselves and stay positioned for success in the year ahead.

If you’d like help evaluating your current policies or identifying potential gaps in your coverage, our team is here to assist. Reach out anytime to schedule a personalized risk review for your business.