2026 (re)insurance predictions on climate, AI and tariffs

2026 (re)insurance industry predictions gathered by The Insurer show some caution in the sector as it settles into a softening market.

Market conditions will put pressure on growth, rate adequacy and profitability in 2026, the International Underwriting Association's director of underwriting Tom Hughes said.

While opportunities remain for those willing to be disciplined, innovative and committed to client service, Hughes identified "geopolitical unrest, climate extremes, rapid advances in artificial intelligence, malicious cyberattacks and litigation trends that outpace regulation" as sources of threats insurers would need to monitor closely.

"Experience shows that soft markets often tempt insurers into unfamiliar areas in search of growth," MS Amlin's chief underwriting officer Martin Burke told The Insurer, arguing that this frequently leads to poor performance. "Maintaining focus on what we know, and executing the fundamentals of risk selection well, will remain the most reliable way to deliver sustainable profitable growth."

SCRUTINY ON CATASTROPHE RISK IN A CHANGING CLIMATE

Burke identified catastrophe-exposed lines in particular as among those where rates are currently reducing. "Climate change is driving natural catastrophe risk higher every year, yet we continue to see rate reductions," he said.

"Some might argue that rates have been high, so there's margin to absorb that. But margins can disappear quickly when the underlying risk is changing."

Burke continued: "When rates fall as risk rises, there's an accelerated effect. What might appear modest softening in any single year, can become material when compounded with growing exposure. That reinforces the importance of a defensive approach."

Catastrophe risk analytics firms serving the (re)insurance industry told The Insurer that they expected insurers to demand more detailed insights from them in 2026.

"In 2026, we expect growing demand for improved hazard modelling across secondary perils, with wildfire the standout," said James Rendell, CEO of modelling firm BirdsEyeView. "Lloyd's syndicates writing U.S. and Australian wildfire, along with Australian MGAs, are increasingly seeking more granular, climate-aware models that go beyond traditional approaches."

Jonathan Jackson, CEO of flood specialist Previsico, said that its customers were "increasingly focused on understanding the nuances of flooding rather than simply tracking weather patterns".

"This includes analysing local drainage systems, surface water behaviour, detailed topographic and geographic data," he added.

Mapfre Economics told The Insurer that growing demand for parametric solutions and specialised coverage against rising catastrophic risks would drive growth in the insurance and reinsurance market "and reinforce the industry's value to society".

But it added that the increasing risk of major disasters posed a challenge and said insurers' response would include "leveraging advanced risk assessment through Big Data and AI".

TECH INVESTMENT IS DONE RIGHT AND WRONG

AI remained a hot topic for the industry and wider global economy in 2025 and is likely to remain high on companies' agendas in 2026.

"The insurance industry is buzzing with AI activity, but realising its value remains a work in progress," Deloitte said in its 2026 outlook for the sector.

"It's easy to get caught up in the utopian future state that we're promised," said Jerad Leigh, co-founder and CEO of Supercede, citing a failure rate for AI projects within large enterprises of as high as 95% and predicting that companies would lose focus of the core problems they are trying to solve.

"If companies maintain their first principles and start small, they can see meaningful value delivered through AI. If they don't, they could see a sizeable investment vanish with nothing to show for it."

The Lloyd's Market Association predicted that smaller, "quick-win" technology projects would take centre stage in 2026. "We encourage all market participants, from suppliers to claims, to begin to look at a modular approach to modernisation, rather than waiting for a single programme to deliver a complete transformation," the body's operations director Joe Brace said.

Brace said brokers would continue to lead the charge towards peer-to-peer connections through new placement platforms, and emphasised the importance of Acord-compliant data standards and the Core Data Record to enable more connectivity.

Deloitte attributed the challenge of realising value from AI to insurers' struggles "with fragmented, messy data sprawl and outdated systems". Foundational data readiness and robust technology architecture will be needed to truly "industrialise" AI in insurance, it said.

In the wider economy, companies' usage of AI will continue to affect the risks insurers underwrite, especially in commercial liability where some underwriters are introducing new exclusions.

Meanwhile, AI's energy demands and its implications for the future of the workforce could give rise to more public opposition, with Beazley predicting that 2026 could see physical protests against data centres. "Governments and businesses must prepare for incidents that threaten data centres and strengthen resilience to keep the essential systems they support running," said Beazley's group head of marine, accident and political risks Tim Turner.

UNCERTAIN GEOPOLITICS AND MORE TARIFF REPERCUSSIONS

One of the industry's challenges in 2026 will be staying agile to "shifts in global politics and economic policies", Mapfre Economics said, which are "shaping risk perceptions and influencing insurance decisions".

Deloitte said changes to global tariffs, introduced by U.S. President Donald Trump in 2025, would have ripple effects on various insurance lines in 2026. The increased price of repair parts and construction materials in the U.S. was increasing claims costs for motor and homeowners insurance, it said, and would ultimately push up premiums and erode underwriting margins. In commercial insurance portfolios, there could be indirect effects too.

Deloitte said tariffs squeezing margins and increasing the risk of payment delays or nonpayments was already causing demand for trade credit insurance to rise sharply, while DAC Beachcroft predicted more was to come in 2026.

"The practical impact of tariffs is, perhaps, still to be felt by exporters to the United States, and beyond given threats of reciprocal tariffs," DAC Beachcroft said.

"This does little to alleviate existing concerns among traders, suppliers, and/or financiers regarding certainty of contractual counterparties complying with payment obligations – and we predict that trade credit insurance will increasingly be viewed as a significant risk mitigant against a potential tariff shock."

Among Beazley's 2026 predictions were that businesses would need to begin navigating the risk of "tariff-washing", following scrutiny over "greenwashing" and "AI-washing" allegations in recent years.

"As trade policies shift rapidly, corporate disclosure faces a persistent challenge – when and how to report tariff impacts, mitigation strategies and financial implications," said Bethany Greenwood, Beazley's group head of specialty risks.

"Overstating or understating these impacts can lead to severe consequences, from reputational damage and stakeholder mistrust to mounting legal action," Greenwood added, citing court cases that are beginning to surface.