The past few years have conditioned business leaders to stay braced for impact. Pandemic disruption, supply chain breakdowns, inflation shocks and labor volatility forced constant recalibration, while wildfires and storms of all kinds left little time to catch a breath.
As 2026 approaches, economic indicators suggest improvement in several areas, yet decision-making still carries the weight of uncertainty.
That tension between progress and caution continues to shape insurance conversations. As companies reset their strategies, which pressures truly warrant attention?
Signs of Stability Beneath the Noise
Despite lingering caution across the broader economy, several areas of the commercial insurance market are entering 2026 with improving conditions.
- Property insurance is beginning to ease. Pricing softened in the back half of 2025 and should continue following a relatively calm hurricane season. While climate change-related risks remain a long-term global reality, particularly with windstorms and wildfires, having fewer major hurricanes this past season has helped the property market.
- Workers’ compensation continues a long-term decline. Rates have fallen as employers invest more in safety, injury prevention and faster response resources for injured employees. On-site care, telemedicine and proactive return-to-work resources reduce unnecessary emergency care while improving recovery outcomes.
- Financial liability lines are stabilizing after a volatile decade. Directors and officers, fiduciary liability and employment practices coverage surged during the pandemic. Since 2022, pricing has declined steadily as market anxiety eased. While rates are unlikely to return to historic lows, conditions appear to be leveling for 2026. Cyber remains a category of its own, as companies improve their defensive posture and new risks emerge.
These improvements matter, but they coexist with areas where pressure remains firmly in place, underscoring why a selective, informed view of the market is essential as we continue into 2026.
Nuclear Verdicts & Litigation Trends Keep Pressure Elevated
General liability conditions are improving modestly, but commercial auto remains deeply challenged. The continued rise of nuclear verdicts has fundamentally altered how liability risk is priced.
Third-party litigation funding, where outside investors finance lawsuits for a share of the outcome, and aggressive legal advertising continue to inflate claim severity, often pushing settlements into punitive territory. Even companies with strong executive support, risk management practices and good safety and loss records are affected, as losses incurred by a few are absorbed by many.
Umbrella and excess liability coverage remain under pressure, particularly in states without meaningful tort reform, and relief is unlikely without legislative action. In this environment, the emphasis has shifted to managing what can be controlled. Fleet management, telematics and proactive safety programs help reduce loss frequency, though the macro effects of nuclear verdicts persist.
Cyber Risk Enters Its Next Phase
Cyber insurance pricing has moderated as baseline controls became standard. Multifactor authentication, backups, incident response plans and pre- and post-breach plans are now table stakes rather than differentiators.
At the same time, new exposure is emerging as businesses integrate AI to drive efficiency and cybercriminals do the same to increase sophistication. Expanding AI infrastructure introduces new points of dependency that extend beyond traditional ransomware concerns.
The next phase of cyber risk centers on resilience, with the focus no longer being whether systems are backed up, but how organizations defend, detect and respond in an automated environment.
People Risk Is Becoming a Core Insurance Consideration
Workforce dynamics are increasingly shaping how insurers evaluate risk. An aging labor force, high turnover and four generations working side by side are changing loss patterns and increasing variability in claims performance.
Younger and less experienced workers tend to drive higher injury frequency, while mental health and well-being now influence safety outcomes in ways insurers did not account for a decade ago. In industries that require in-person work, including construction, manufacturing and healthcare, these factors directly affect exposure and predictability.
Stable workforces and strong safety cultures position organizations more favorably, while high churn and uneven supervision introduce volatility insurers price for.
‘Adapt or Fall Behind’ Has Become a Business Insurance Imperative
Insurance remains a critical financial backstop, but it cannot compensate for outdated approaches to risk, culture or decision-making.
Success will favor leaders willing to evolve and rethink how they support their workforce, manage exposure and build resilience into their operations.
Those who adapt will shape outcomes; those who don’t will be shaped by them.
James Jorgensen is a principal and executive vice president of business insurance at Marsh McLennan Agency. With more than 20 years of experience in risk management and insurance, he leads the firm’s business insurance strategy in the region, advising organizations on complex risk, coverage design and long-term resilience.
Did you Know: AI is expected to drive a 40% increase in labor productivity by 2035. As adoption accelerates, insurers are paying closer attention to how businesses manage AI-related risks, including data privacy, vendor oversight and algorithmic bias in employment decisions that can introduce new liability exposure.
