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Six Trends Affecting Commercial Insurance in 2026
January 15, 2026 · Commercial Lines
The commercial insurance market is beginning to steady after several years of disruption, but stability does not mean simplicity. In 2026, businesses are still navigating a mix of legal, economic, technological, and environmental pressures that continue to influence underwriting decisions and insurance costs. Understanding how these forces affect coverage, pricing, and availability helps organizations make more informed, fiscally responsible decisions—and puts them in a stronger position when working with insurers.
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Social Inflation and Litigation Trends
Social inflation refers to societal trends that push insurance costs above the overall inflation rate. Current drivers of social inflation include increased third-party litigation funding and the rise of anti-corporate culture. Amid these trends, businesses have been held more accountable for their wrongdoings, sometimes resulting in nuclear verdicts (jury awards exceeding $10 million). Social inflation has been a main factor in rising claim severity and rate jumps across many commercial insurance segments.
Action step: Review contracts, risk transfer language, and loss prevention practices to help reduce litigation exposure and improve defensibility in the event of a claim.
AI and Technology Exposures
The rapid adoption of AI tools is creating new liability risks, including algorithmic bias, privacy concerns, and cyber vulnerabilities. Insurers are scrutinizing policyholders’ technology governance and disclosure practices, with inadequate oversight potentially triggering directors and officers (D&O), employment practices liability (EPL), and cyber claims
Action step: Establish clear internal governance around AI and technology use, including oversight, documentation, and data protection controls.
Inflation and Supply Chain Volatility
Although general inflation has cooled, wage and medical inflation remain elevated, while tariffs and global supply chain disruptions continue to inflate construction and repair costs. These factors are creating property valuation gaps, underinsurance concerns, and higher claims severity, prompting insurers to enforce rigorous valuation protocols.
Action step: Conduct regular reviews of property values, replacement costs, and business income limits to help avoid underinsurance.
Cybersecurity Threats and Fraud Risks
AI-powered cyberattacks, ransomware incidents, and business email compromise (BEC) scams are escalating despite recent market softening. Shadow IT and deepfake-enabled fraud are also contributing to rising claims costs, prompting insurers to require robust cybersecurity controls and fraud prevention measures as prerequisites for coverage.
Action step: Implement layered cybersecurity controls, employee training, and fraud prevention procedures, and document these efforts for underwriting review.
Learn more about cyber liability insurance.
Extreme Weather Events
Natural disasters (e.g., hurricanes, tornadoes, hailstorms, and wildfires) continue to make headlines as they become increasingly frequent and costly. Making matters worse, these events aren’t limited to one geographic area. Natural disasters continue to leave businesses with significant repair and replacement expenses.
Action step: Evaluate location-specific exposures and develop response and continuity plans to help reduce downtime and recovery costs after an event.
The National Centers for Environmental Information (NCEI) has published data detailing billion-dollar weather and climate disasters in 2024. Click here to view the report. This information helps explain what property insurers are trying to deal with as weather and climate disasters increase in frequency and severity.
Underwriting Discipline and Capacity Management
Even as some segments show signs of stabilization, insurers remain cautious. Many insurers are maintaining strict underwriting standards and emphasizing risk quality, loss control, and accurate valuations. Organizations that cannot demonstrate strong risk management practices may face higher premiums, reduced limits, or coverage restrictions.
Action step: Keep underwriting information current and proactively share risk improvements, safety measures, and loss control efforts with insurers.
Understanding these trends is an important first step, but action is what ultimately makes the difference. Businesses that take a proactive approach to risk management, loss control, and coverage planning are better positioned to manage costs, strengthen underwriting outcomes, and protect long-term operations. This is where thoughtful guidance matters. We’re here to help organizations navigate market conditions, identify opportunities to reduce risk, and make informed insurance decisions with confidence.
Contact your Leavitt Group insurance advisor for risk management guidance and commercial property insurance solutions.
