6 Key Insurance Risks Businesses Should Prepare for in 2026

As 2026 gets underway, companies of all sizes are navigating a landscape filled with new challenges and fast-moving risks. From legal battles with soaring payouts to highly sophisticated cyber threats, the issues facing businesses today are more unpredictable than ever. Staying protected means planning ahead, understanding the pressures shaping the market, and ensuring your insurance coverage keeps pace with emerging threats.

Below are six major risks organizations should be keeping a close eye on this year.

1. Social Inflation and the Growth of High-Dollar Verdicts

Large jury awards, often exceeding $10 million, are becoming more common across many regions. These "nuclear verdicts" are pushing liability insurance premiums upward and making coverage harder to secure. The ongoing rise in these awards—often referred to as social inflation—is being fueled by outside funding of lawsuits, shifting attitudes among younger jurors, and courtroom strategies that emphasize emotion to drive larger settlements.

Industries such as manufacturing, healthcare, and automotive are feeling these pressures most intensely. While some insurers are turning to artificial intelligence to forecast and manage litigation risk, and states are exploring policy changes to rein in excessive awards, social inflation remains one of the most costly and uncertain challenges for businesses in 2026.

2. Increasing Cyber Threats and AI-Driven Attacks

Cybercriminals are becoming more advanced, using tools like AI-generated attacks and ransomware-as-a-service to infiltrate systems with alarming speed. These breaches can expose sensitive data, disrupt operations, or cause long-term damage to a company’s reputation. Even a single cyber incident can result in significant losses through downtime, regulatory penalties, or legal liability.

To combat this, companies need layered cybersecurity defenses. This includes multi-factor authentication, advanced threat monitoring, consistent employee training, and keeping software properly patched. Cyber insurance plays an essential role as well, but most carriers now require businesses to meet specific cybersecurity standards before issuing a policy. Prevention and preparedness are no longer optional—they’re part of staying insurable.

3. Climate-Related Losses and Catastrophic Events

Severe weather events—from floods to storms to wildfires—are becoming more frequent and more destructive. As losses climb, obtaining affordable property coverage is harder for businesses located in high-risk zones. In some places, insurers are scaling back their offerings or exiting the market entirely.

To address this, many companies are strengthening their properties with upgraded materials and designs that better withstand extreme conditions. Others are turning to innovative insurance solutions that provide automatic payouts based on measurable triggers like rainfall totals or wind speed, eliminating long waits for damage assessments. Preparing for climate-related disruptions is now a critical part of long-term business planning.

4. Ongoing Supply Chain Strains and Operational Interruptions

Despite improvements in recent years, supply chain challenges continue to create uncertainty. Port backups, material shortages, and geopolitical tensions can cause delays that ripple across industries. Even if a business doesn’t experience direct damage, the inability of a supplier or transportation partner to deliver on time can halt operations.

To better manage these vulnerabilities, more organizations are adding specialized insurance protections that cover supply chain failures, international trade disruptions, or cyber incidents affecting logistics providers. These policies can help stabilize operations when external issues threaten productivity.

5. Evolving Regulations and Legal Complexity

Regulatory requirements are evolving rapidly, particularly in areas such as data privacy, environmental accountability, and sustainability. Keeping up with shifting laws can be costly and time-consuming, and missing key updates may expose businesses to fines or lawsuits.

Rules like the California Consumer Privacy Act (CCPA) are reshaping how companies handle personal data, while expanded consumer protections in Europe are increasing the likelihood of litigation. Insurance carriers are also facing more oversight, which may influence how policies are structured in the future. It’s essential for businesses to routinely evaluate their insurance portfolios to identify exclusions or gaps related to new regulatory obligations.

6. Technology-Related Risks in an Increasingly Digital Workplace

Digital transformation continues to accelerate, with more organizations relying on cloud tools, automation, and artificial intelligence for daily operations. While these technologies deliver efficiency, they also introduce new vulnerabilities. System outages, software failures, or incorrect AI outputs can cause significant operational disruptions or even legal repercussions.

Insurance options for technology failures and digital disruptions are growing, but strong internal controls remain a must. Regular system updates, secure configuration practices, and responsible use of AI and automation are key to minimizing exposure. The combination of insurance coverage and disciplined tech management can help prevent costly downtime.

Prepare for a More Uncertain 2026

The challenges businesses face this year are interconnected, and one disruption can easily trigger another. That’s why proactive risk management is essential. Reviewing your insurance policies, staying informed about emerging threats, and updating your protection strategies can make a significant difference in maintaining stability.

If you’d like support evaluating your current coverage or identifying potential gaps, give us a call to schedule a customized risk review tailored to your industry and operations.