What’s in store for insurance in 2026? RPC's Annual Insurance Review identifies key risks

Regulatory change, rapid technological advancement and growing geopolitical uncertainty are just some of the key pressures insurers face as risk complexity accelerates, according to the latest edition of Annual Insurance Review from international law firm RPC.

As the insurance industry enters another year defined by rapid change and heightened uncertainty, RPC's annual Annual Insurance Review examines the key trends set to shape the sector in 2026 and beyond.

The review brings together insight from the firm’s leading lawyers and Global Access partners, highlighting the growing need for resilience, clarity of coverage and proactive risk management across all lines of insurance.

Key findings from the report include:

1. AI-related exposures continue to expand

Artificial intelligence continues to present complex and evolving risk. The review identifies growing concern around 'silent AI' exposure under legacy policy wordings, alongside a significant broadening of liability under the EU Product Liability Directive, which now extends to software and AI systems. The EU AI Act is also reshaping duties of care. In response, insurers are moving towards AI-specific clauses, endorsements and dedicated generative AI coverages.

2. PFAS and environmental liability move up the agenda
Environmental liability exposures linked to per- and polyfluoroalkyl substances (PFAS) are escalating, with accelerating criminal and civil enforcement action at EU level. Increasingly compared to asbestos in terms of scale and longevity of exposure, PFAS risks are prompting insurers to prepare exclusions, impose sub-limits and increase premiums as regulatory scrutiny intensifies.

3. Geopolitical volatility fuels political violence and trade credit claims
Sustained global conflicts, widening sanctions regimes and increasing risks of asset seizure are driving heightened claims activity. Expanding tariffs, trade blockades and drone-related disruption to critical infrastructure are complicating coverage triggers, notification requirements and aggregation analysis across political violence, marine and trade credit lines.

4. Claims inflation and underinsurance pressures intensify
Rising tariffs and supply chain disruption are pushing up rebuild and repair costs while extending project timelines, amplifying business interruption exposures. At the same time, the review highlights heightened directors’ and officers’ exposure linked to insolvencies, alongside a continued rise in fraud, including exaggerated and opportunistic claims.

5. Cyber risk evolves with supply-chain disruption and litigation growth
Cyber incidents involving third-party suppliers are becoming more frequent, driving complex, multi-party claims. The review also notes an increase in data subject litigation following the Farley decision, which lowered the threshold for non-material damage. This shift is increasing notification volumes, investigation demands and defence cost exposure for insurers.

Simon Laird, Partner and Global Head of Insurance at RPC, says: “The insurance sector is entering 2026 facing an unprecedented convergence of regulatory change, technological risk and geopolitical instability. Our Annual Insurance Review highlights not only where exposures are growing, but how insurers can respond through clearer wordings, targeted coverage solutions and a renewed focus on resilience.”

For more insights and to read the full report click here.