Navigating the evolving insurance landscape: Trends, risks and strategies for 2026 and beyond

• CAT volatility and its impact: As we move into 2026, catastrophe (CAT) volatility remains a major concern for the insurance industry. The frequency and severity of natural disasters continue to challenge insurers’ risk modeling and pricing strategies. In 2025, global insured losses were in excess of $100 billion, with more than 90% of those losses occurring the United States. Insurers are investing heavily in advanced analytics and climate modeling tools to better anticipate and mitigate these losses. This heightened CAT volatility is driving more frequent adjustments in coverage terms and premiums, making risk selection and portfolio diversification more critical than ever. 
• Easing reinsurance markets: After a period of hard reinsurance markets driven by elevated CAT losses and capital constraints, signs point to some easing in 2026. Increased capital inflows from alternative sources are improving market liquidity and expanding capacity. This trend is resulting in more competitive pricing and broader coverage options for primary insurers, allowing them to better manage their exposure and stabilize their balance sheets. The easing of reinsurance can also foster innovation in product offerings, particularly for complex risks. 
• P&C insurance developments: Property and casualty (P&C) insurance is evolving in response to both CAT volatility and changing customer expectations. Insurers are focusing on digital transformation, leveraging automation and artificial intelligence (AI) to streamline underwriting, claims processing and customer service. The increasing adoption of data-driven risk assessment tools is enabling insurers to offer more personalized coverage and proactive risk management solutions. Additionally, regulatory changes and evolving climate risk standards are prompting insurers to update their policies and coverage limits. 
• Specialty and managing general agents: Growth in the specialty insurance market, particularly within excess and surplus (E&S) lines and managing general agents (MGAs), continues to be robust. Insurers are finding opportunities in areas such as cyber liability, environmental coverage and emerging risks that require flexible underwriting and innovative solutions. MGAs are also capturing a larger share of the market by leveraging data analytics and technology platforms, enabling fast product development and more precise risk segmentation. Their agility allows them to respond quickly to evolving client needs, making them attractive partners for insurers to expand their reach and diversify their portfolios. 
• Life and annuity insurance developments: The retirement market, including life insurance and annuities, continues to experience steady growth fueled by demographic shifts and changing consumer needs. As the population ages and more individuals approach retirement, demand for guaranteed income solutions and financial protection is on the rise. Life insurers are responding with innovative annuity products, such as fixed indexed annuities and variable annuities with enhanced living benefits, to address concern about market volatility and longevity risk.  

During our recent 2026 insurance industry outlook webinar, we asked insurers what their main risk-related watch item is for the year. The results weren’t shocking: 38% of respondents said AI governance, 12% said claims/benefits and dispute management, 18% said data quality and legacy systems, 17% said risk modeling and stress testing and 15% said third-party risk and delegated oversight. Refer to our risk advisory webpage for more information on how to best combat your main risk-related watch item in the year (and years) ahead.

In the on-demand webinar recording below, the risk advisory section with John Romano starts at 2:24. 

2026 marks the insurance industries move from digital experimentation to large-scale industrialization, impacting processes and business models. Regulators like the National Association of Insurance Commissioners (NAIC) drive change, emphasizing a need for robust governance to prevent inaccuracies and reduce unfair discrimination when utilizing digital tools. Beyond this, data governance, AI risk, third-party management and cybersecurity are becoming critical constraints as digital solutions scale up. Here are some key trends to keep an eye on in 2026:  

Trend 1 – AI moves from pilots to production

Individual teams are no longer experimenting with AI in isolation. Executive leadership is starting to set the tone for enterprise-wide adoption. AI copilots now help insurance professionals process submissions, summarize evidence and recommend actions, reducing tedious tasks. For example, agentic AI can autonomously execute steps within insurance workflows, following constraints and streamlining processes. Insurance organizations are also using robotic processes automation (RPA) alongside AI to manage costs and bridge gaps during the transition from pilots to production. Despite these shifts, true AI scalability in insurance still requires high-quality, robust data rather than relying on innovative technology solutions.  

Trend 2 – Data can be a barrier or the breakthrough

• Inconsistent data: Insurers struggle with data scattered across PDFs and different systems, making reliable AI analysis difficult and reducing efficiency. To combat this, unified data platforms and AI-driven extraction tools have transformed scattered data into structured, centralized datasets, enabling accurate analysis and boosting operational efficiency.  
• Need for data lineage and accessibility: Data must be traceable and easily accessed to ensure trustworthy outputs and support business operations across departments. Implementing robust data governance frameworks and metadata management ensures full traceability and easy accessibility, fostering trust in AI outputs and improving cross-department collaboration. 
• Lack of governed data products: Fragmented, ungoverned data assets make it difficult to ensure consistency, compliance and scalability across the organization. Transitioning to reusable, governed data products creates a scalable foundation for innovation, empowering underwriting, claims, distribution and finance teams to make faster, data-driven decisions.  

Trend 3 – Customer experience (CX)

Customer experience (CX) is the battleground, claims is the brand: CX has always been central to customer retention. Using technology to ensure the claims process is as seamless as possible is what will drive long-term loyalty and satisfaction. Customers value how their claims are handled over policy details, so positive interactions drive repeat business and trust overall. Leading insurers prioritize clear communication, explaining steps and requirements to keep customers informed and reassured. GenAI also streamlines updates and policy language, which enhances CX when supported by secure, compliant data management. The seamless orchestration of claims processes across bots, agents and customers is critical to delivering a smooth, efficient CX and reducing friction during complex interactions. 

Trend 4 – Cyber and third-party risk

Cyber resilience is now a strategic driver for business growth, not just an information technology (IT) requirement. Modern risks extend beyond internal controls, affecting the entire business ecosystem through third-party exposures. As agentic AI systems interact directly with customers, new risks are emerging around trust, compliance and security. Because of this, executives must enhance identify management, vendor oversight, secure design and incident response capabilities.  

Trend 5 – Legacy modernization and intelligent automation

Traditional core systems can’t efficiently support application programming interface (API)-first strategies, real-time data flows or scalable AI governance. Organizations are moving from full replacement to extracting key services and upgrading their data pipelines for efficiency. Automating middle-office tasks and reducing manual exceptions enables gradual change and supports future innovation. Because of the fact that managing legacy systems becomes even more complex as organizations modernize, centralized governance is critical to ensure compliance, security and consistent performance across the growing digital workforce.  

For a deeper dive into the world of digital transformation in the insurance industry, check out our article and watch the recordings from our recent webinars on the subject. 

In the on-demand webinar recording below, the digital solutions section with David Hickey and Dave DuVarney starts at 17:49. 

The SEC continues to focus on traditional accounting and disclosure areas, with new emphasis on emerging risks:  

• Management Discussion & Analysis (MD&A): SEC staff continue to prioritize robust MD&A disclosures, including clarity around trends, risks and critical assumptions. SEC comments arise when risk factor disclosures lack quantification or trend data and when the MD&A does not sufficiently tie underwriting and investment performance to key drivers like catastrophe losses, reserves adequacy or unrealized investment valuation.  
• Non-GAAP financial measures: The SEC requires clear reconciliation to generally accepted accounting principles (GAAP) and explanation of why these measures provide useful information versus potentially misleading investors.  
• Segment reporting: Disclosures around business segments tied to ASU 2023-07 continue to draw repeated scrutiny. If carriers fail to delineate segments (e.g., P&C versus life insurance) with clear criteria, regulators may require more detailed reconciliations or restatements.  
• Revenue recognition: Revenue and premium recognition can be an issue for insurers, especially those with long duration contracts and complex ceded reinsurance structures. Expectation is disaggregation clarity, remaining performance obligations and critical accounting estimate transparency, especially in fee based and ancillary insurance revenues.  
• Internal Controls Over Financial Reporting (ICFR) and disclosure controls: Evolving tech and AI use and cyber incidents prompt control questions and targeted comments. Insurance carriers may face comment when actuarial models or reserve processes lack documentation or there are gaps in controls over estimate processes or financial close cycles.  
• Long-term duration contracts (LDTI ASU 2018-12): SEC staff has actively provided guidance, and issued comment letters, regarding the implementation of LDTI improvement accounting standards. Remediation efforts focus on easing implementation complexity, especially for sold/de-recognized contracts and addressing disclosure burdens, involving policy elections for sold contracts, streamlining adoption via guidance and correcting past errors.  
• Goodwill and intangible assets: The SEC look for early warning signals and the process for assessing impairment triggers. This often results in detailed questions about valuation techniques and key assumptions used in business combinations and purchase price allocations. 
• Climate-related disclosures: As new climate rules are implemented, the SEC is expected to continue focusing on consistent and material disclosures regarding climate risks and their financial impacts.  
• AI and emerging technology disclosures: The SEC is scrutinizing AI-related claims to prevent “AI washing” and requires accurate, complete and balance disclosures of related risks. Generic or promotional language about AI without rigorous risk analysis has drawn attention and will require remediation. 
• Crypto and digital asset exposure: The SEC’s position generally required companies with exposure to digital assets to provide robust and specific disclosure in their public filings. If there is any exposure, adopt a safeguarding policy, counterparty risk mapping, liquidity contingency and legal/proceeding tracking and be prepared to disclosure tailored, scenario-based impacts.  

In the on-demand webinar recording below, Vincent Devine’s section on SEC comment letter trends starts at 1:11:15.  

While 2025 was a year of change for many insurers, seeing the effective date of the long-awaited principles-based bond project for statutory filers and targeted improvements to the accounting for long-duration contracts for non-SEC GAAP filers, 2026 and future years are not currently anticipated to roll out such transformative change. Upcoming statutory accounting changes include clarifications around combination reinsurance contracts, extension of provisions related to net negative interest maintenance reserves, and new requirements in response to updated Medicare programs. On the GAAP side, upcoming standards focus on income taxes, compensation, and credit losses. 

As always, you can find our articles on updates from the National Association of Insurance Commissioners (NAIC) Statutory Accounting Principles (E) Working Group’s (SAPWG) latest meetings on our website. 

In the on-demand webinar recording below, Eric Kegler’s section on new accounting guidance and updates starts at 49:15. 

The One, Big, Beautiful Bill Act (OBBBA) represents a significant legislative change with far-reaching impacts for insurance organizations: 

• Full expensing of qualified property: The OBBBA permanently revives and extends immediate 100% expensing of the cost of qualified property acquired on or after Jan. 20, 2025. Qualified property is defined as being tangible, personal property with a recovery period of 20 years or less, which includes qualified improvement property (QIP) for real estate purposes. For determining acquisition date, property is not considered to be acquired after the date on which a written binding contact has been entered to acquire the property. Assets placed in service before Jan. 20, 2025, are only eligible for 40% bonus depreciation.  
• Increase in Section 179 expensing: OBBBA increases the maximum amount a taxpayer may expense and increases the phase-out threshold amount. The maximum deduction dollar amount more than doubles $2.5 million from $1.22 million in 2024. The phase-out threshold is increasing to $4 million. The $2.5 million limitation is reduced (but not below zero) by the amount by which the cost of qualifying property placed in service during the taxable year exceeds $4 million. This applies to property placed in service in taxable years beginning after Dec. 31, 2024. Please note: You can only deduct eligible Section 179 expenses up to your business’s net taxable income. The deduction can reduce your taxable income to zero, but not below it. Many states may opt out of this provision for state and local tax purposes. 
• 168(k) bonus depreciation limit increase: The Tax Cuts and Jobs Act (TCJA) opened the door to almost unlimited full expensing by increasing the 168(k) bonus depreciation to 100% of qualifying assets; however, the deduction limits were subject to a phase out period beginning in 2023. Under the TCJA’s annual reduction schedule, qualified property assets were only eligible for 40% bonus depreciation in 2025. The OBBBA revives and permanently extends 100% expensing of the cost of qualified property acquired on or after Jan. 20, 2025.  
• Limitation on business interest deductions: Section 163(j) was previously introduced under the TCJA, and now OBBBA restores a more generous interest deduction limit that was originally in place from 2018 through 2021. Section 163(j) was initially based on earnings before interest, taxes and depreciation and amortization (EBITDA). Beginning in 2022, depreciation and amortization are no longer added back, resulting in greater limitations for many businesses. OBBBA permanently bases the limitation on EBITDA for deductions beginning in 2025. It includes a new provision that treats any capitalized interest (other than interest capitalized under Sections 263(g) and 263A(f)) as interest subject to the limitation for taxable years after Dec. 31, 2025.  
• Restoration of domestic research and experimental expenditures deductibility:  

-Domestic research expenditures: OBBBA suspends Section 174 capitalization for domestic research expenditures only and introduces Section 174(a), which allows optional expensing or elective capitalization and recovery over more than 60 months or 10 years under Section 59(e). 

-Software development and effective dates: Software development expenses remain subject to Sections 174 and 174(a). Changes are permanent, and in some cases, retroactive. They are generally effective for tax years beginning after Dec. 31, 2024. Small businesses with average gross receipts of less than $31 million may elect retroactive application to tax years after Dec. 31, 2021.  

-Deduction acceleration: Taxpayers who capitalized domestic research and experimental (R&E) after Dec. 31, 2021, and before Jan. 1, 2025, may elect to deduct unamortized costs over one year or two years.  

• Section 170 charitable contribution limits: New 1% floor limitation on the deduction a corporation can claim for charitable contributions under Section 170 for tax years beginning after Dec. 31, 2025. Charitable contribution deduction can be claimed only to the extent that the aggregate amount of charitable contributions exceeds 1%, but not 10%, of a corporation’s taxable income for the tax year.  

To stay on top of all of the latest tax updates impacting the insurance industry, keep an eye on our webpage.   

In the on-demand webinar recording below, Carrie Small’s section on new tax guidance and updates starts at 1:01:42.