Insurance sector braces for disruptive cyber, climate and geopolitical risks in 2026

A major survey and accompanying research from Digital Insurance, conducted October–December 2025, paints a picture of an insurance sector bracing for intensifying cyber and climate exposures while weighing geopolitical and regulatory pressures that could reshape underwriting, disclosure and product strategy. The study polled a cross-section of industry participants , agents and brokers (33%), carriers (59%), reinsurers (2%), adjusters (5%) and other professionals (1%) , across firms ranging from under $1 billion to more than $20 billion in written premium.

According to the report by Digital Insurance, respondents flagged cyber threats as the most imminent hazard: 39% said attacks were certain to occur and a further 52% judged them probable. Insurers expect these incidents to hit the market hard, with 43% anticipating a very negative effect and 35% a negative one. The survey links this concern to wider adoption of artificial intelligence and its role in enabling more sophisticated attacks.

“Cyber threats will continue to evolve faster than most businesses can protect against them, with small and mid-sized companies emerging as prime targets for sophisticated ransomware and social engineering attacks,” Rajni Kapur, CEO of All Solutions Insurance, explained to Digital Insurance last fall. “In response, insurers will adopt more dynamic underwriting models, enforcing stricter cybersecurity standards that require insureds to invest in training, multifactor authentication and ongoing monitoring. The demand for cyber coverage will accelerate, driven by regulatory mandates and the rise of AI-enabled threats.”

Broader industry research echoes the survey’s findings. Moody’s identifies cyber incidents and systemic disruptions among a set of emerging risks likely to reshape global insurance in 2026, urging firms to recalibrate underwriting and capital planning. RPC’s annual review also cites AI-related exposures and evolving cyber liabilities, and calls for clearer policy language and tailored coverages to close protection gaps.

Climate and catastrophe exposures remain a persistent challenge. The Digital Insurance survey found 31% of respondents believed a major weather event was definite in the year ahead and 52% rated it probable, with 40% expecting a very negative industry impact and 35% a negative one. The report notes U.S. insured catastrophe losses were still substantial in 2025, even if some carriers experienced a lighter hurricane season that year.

“Carriers cannot predict the weather, so while most feel they have the right product and pricing in most markets today, that could change if weather related losses mirror 2024 vs. 2025, a relatively low CAT year, which was good for carrier profitability,” Lauren Menuey, managing director of Goosehead Insurance, told Digital Insurance.

Independent analyses stress the same themes. Markel highlights elevated catastrophe losses and climate-driven volatility as a central trend for 2026, while Moody’s warns natural catastrophes will continue to test balance sheets and pricing adequacy. Industry commentators point to the need for improved modelling, expanded risk mitigation services and recalibrated reinsurance strategies.

Geopolitical and trade tensions are also on carriers’ radars. Digital Insurance respondents judged tariffs and trade policy volatility likely to persist, with many expecting negative consequences for underwriting and claims dynamics. Jeremie Saada, head of U.S. Executive Risk at Beazley, warned of disclosure risks tied to tariffs: “A new challenge is emerging in corporate disclosure: determining the appropriate timing and approach for publicly reporting on tariff impacts, mitigation strategies, and financial implications amid rapidly evolving trade policies. ‘Tariff-washing’ is poised to become the latest in a series of disclosure pitfalls, joining terms like ‘greenwashing’ and ‘AI-washing’ that underscore the risks of miscommunication or omission regarding the impact of tariffs on a business.

Whether companies overstate or understate these effects, the consequences are often the same: legal exposure, reputational damage, and loss of stakeholder trust. Today’s public comment and disclosure will be held to a standard. To navigate these risks effectively, insurers and compliance teams must collaborate to ensure future risks are communicated transparently and responsibly, reducing the likelihood of regulatory scrutiny or legal action.”

Regulatory shifts and fiscal policy also feature in the risk matrix. More than half of survey respondents expected reductions in federal disaster funding to be at least probable, and many foresaw potential changes to FEMA’s role, raising questions about cost allocation between public and private sectors and the implications for pricing and coverage availability.

Despite the threats, carriers see commercial opportunity. Digital Insurance reports 86% of participants anticipate moderate to strong growth in cyber insurance demand, while commercial and small business lines were forecast to enjoy more modest expansion. Overall, 84% of respondents expect some growth for their organisations in 2026, with most predicting limited to moderate gains.

Other sector studies reinforce the imperative to innovate. Mercer urges insurers to adopt AI primarily as a decision-support tool while maintaining transparency and adapting to regulatory change. Insurance Thought Leadership and Insurance Journal underscore the accelerating role of insurtech, telematics, IoT and advanced analytics to enable more granular pricing, fraud detection and product embedding. RPC and other legal advisers stress the need for clearer policy wordings to address novel exposures such as PFAS and emerging liability classes highlighted by Moody’s.

Taken together, these findings portray an industry at a strategic inflection point. Insurers are being pushed to strengthen cyber controls and climate resilience, refine disclosure and governance practices, and accelerate the deployment of advanced analytics and AI while guarding against the secondary risks those technologies bring. The balance between tightening underwriting discipline and pursuing growth through new product design and technology-enabled services will likely determine which carriers emerge most resilient in 2026.