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Perspectives: Policyholders face complex recovery environment - Business Insurance Skip to content Register for free Search Search Log In Risk Management Cyber Risks Pricing Trends Mergers & Acquisitions Technology Sponsored Content WSIA RISKWORLD Workers Comp & Safety Workers Comp Cost Control Pain Management Workplace Safety International EMEA Asia-Pacific Latin America People Events BI Intelligence Top 100 Agents & Brokers Best Places to Work 2025 Lists Directories Insurance Pricing BI Stock Index Magazine Current Issue Past Issues Subscribe Women to Watch ALL INsurance Resources Risk Perspectives Sponsored Content Webinars White Papers Risk Management Cyber Risks Pricing Trends Mergers & Acquisitions Technology Sponsored Content WSIA RISKWORLD Workers Comp & Safety Workers Comp Cost Control Pain Management Workplace Safety International EMEA Asia-Pacific Latin America People Events BI Intelligence Top 100 Agents & Brokers Best Places to Work 2025 Lists Directories Insurance Pricing BI Stock Index Magazine Current Issue Past Issues Subscribe Women to Watch ALL INsurance Resources Risk Perspectives Sponsored Content Webinars White Papers Risk Management Cyber Risks Pricing Trends Mergers & Acquisitions Technology Sponsored Content WSIA RISKWORLD Workers Comp & Safety Workers Comp Cost Control Pain Management Workplace Safety International EMEA Asia-Pacific Latin America People Events BI Intelligence Top 100 Agents & Brokers Best Places to Work 2025 Lists Directories Insurance Pricing BI Stock Index Magazine Current Issue Past Issues Subscribe Women to Watch ALL INsurance Resources Risk Perspectives Sponsored Content Webinars White Papers Risk Management Cyber Risks Pricing Trends Mergers & Acquisitions Technology Sponsored Content WSIA RISKWORLD Workers Comp & Safety Workers Comp Cost Control Pain Management Workplace Safety International EMEA Asia-Pacific Latin America People Events BI Intelligence Top 100 Agents & Brokers Best Places to Work 2025 Lists Directories Insurance Pricing BI Stock Index Magazine Current Issue Past Issues Subscribe Women to Watch ALL INsurance Resources Risk Perspectives Sponsored Content Webinars White Papers Perspectives: Policyholders face complex recovery environment by Daniel Ruehle Current Issue , Cyber Risks , Emerging Risks , Property , Technology Mar 1, 2026 2025 was a challenging year for insured losses, with $107 billion in natural disaster claims, ransomware attacks accounting for 76% of incurred cyber insurance losses in the first half, and food recall losses surging to the highest level in two years. As claims surge in volume and intensity, the challenge for policyholders in 2026 will be adapting to this complex recovery environment, where property insurers demand greater valuation accuracy, cyber insurers deny previously standard coverage and new regulations reshape timelines across all lines of insurance. Responses to these shifts will separate companies that capture every dollar of recovery from those that accept costly gaps. Property After years of hardening, the property insurance market is beginning to improve for buyers. As pricing pressure eases, underwriters are shifting their focus to valuation accuracy, increasing scrutiny to weed out inflated values and inaccurate risk assessments. In this environment, companies that undervalue their property or inflate replacement costs risk leaving millions on the table, either through reduced claim payments or by overpaying in premiums. In early 2026, rate reductions and more favorable terms for quality risks have led to lower premiums, improved policy terms, higher sub-limits and increased capacity, particularly in the energy sector. Expanded capacity is translating into more flexible deductibles, creating a window for companies to reduce costs and secure better terms before the market hardens again. These improvements are contingent on accurate valuations. Underwriters are demanding that business interruption valuations are supported by recent studies or third-party reviews, a shift driven in part by new state-level timelines that give insurers less time to investigate values after a loss occurs. With compressed timelines and increased oversight, insurers need accurate valuations up-front to avoid mispricing risk. The stakes are higher now: Underreporting directly affects recovery outcomes, triggering penalties and claim reductions even when not explicitly stated in policy terms. Increased scrutiny stems largely from recent losses. 2025 marked the sixth consecutive year in which insured catastrophe losses exceeded $100 billion. Record catastrophes, combined with reconstruction cost inflation from tariffs, have made insurers cautious about underpriced exposures as markets soften. In today’s property market, accurate valuations backed by updated replacement-cost studies unlock better terms and prevent costly coverage gaps. Companies without them will pay the price — either in premiums or at claim time. Cyber After years of declining rates and softer terms, cyber insurers are reversing course on three fronts: pricing, capacity and coverage. Prices are rising, with some sources suggesting that premiums could increase 15% this year after softening in 2025. Capacity is shrinking, as major insurers reduce cyber exposure to focus more on other lines of insurance. Underwriters are demanding stronger proof of security controls before writing policies, making coverage harder to secure. Coverage also is narrowing as insurers eliminate previously standard protections, including ordinary payroll coverage and contingent business interruption from third-party failures. When the CDK global ransomware attack in June 2024 forced businesses offline, hundreds of auto dealerships thought they were covered, until insurers denied millions in payroll claims, classifying employee payments as business decisions rather than covered losses. Payroll denials represent a significant portion of overall claims, and while property policies typically include ordinary payroll coverage, cyber policies do not. Large-scale incidents cause cascading losses. When the CrowdStrike outage occurred in July 2024, hundreds of dependent companies were forced offline, mirroring the cascading effect of natural disasters. Despite many policyholders’ lack of coverage for third-party incidents, contingent cyber coverage is critical, because extended outages can generate millions in unrecoverable losses. New federal reporting requirements add another layer of complexity. The Cyber Incident Reporting for Critical Infrastructure Act final rule, expected in May 2026, will require critical-infrastructure providers and their key technology vendors to report cyber incidents within 72 hours and ransom payments within 24 hours. These timelines mean companies must notify insurers and file government reports simultaneously, often before the full effect is known. For companies that operate in the United Kingdom, the U.K. Cyber Security and Resilience Bill proposes similar reporting requirements. To protect themselves, companies should identify their critical technology dependencies, including the vendors and platforms essential to their operations, and ensure that policies cover these third-party risks. Business interruption losses from cyber events now rival or exceed direct incident response costs, meaning losses for extended outages can exceed policy limits for companies with inadequate coverage. Product liability In 2025, product recalls followed a pattern: Fewer events caused far greater impact, with the average recall now affecting dramatically more units. As tariffs drive higher costs and regulatory requirements extend timelines, claims in 2026 will be more expensive and complex to recover. Product recall policies are expanding to cover issues such as mold, rancidity and quality, yet this evolution has struggled to keep pace with the complexity of losses. For example, traditional policies often don’t account for cross-border tariff impacts, multi-jurisdictional regulatory requirements, or exponential third-party exposures. Food recalls are growing in severity. While recall events fell 3.8% in 2025, affected units skyrocketed 232% to 70 million. Companies are recalling fewer times, but when they do, they recall in greater volume. Adding to this pressure, the EU General Product Safety Regulation and U.S. food policy shifts now require stricter reporting, better testing protocols and more comprehensive documentation, extending recovery timelines and adding compliance costs to already-expensive recalls. A single recall event now triggers cascading third-party claims and downstream liability. In the automotive sector, a record 7 million vehicles were recalled in 2025, triggering $600 million in special charges. Tariff-driven cost increases are hitting import-reliant industries the hardest. As tariffs drive recall costs up about 40% across imported and cross-border supply chains, import-reliant industries like food, pharmaceuticals, automotive and consumer products face disproportionate exposure. Increased expenses affect every stage, including replacement sourcing, transport, disposal and remanufacturing. When recalls happen, companies often must source replacement materials from alternative suppliers on short notice. These decisions drive costs higher — a burden compounded by tariffs. Insurers frequently dispute elevated costs, arguing that companies should have found cheaper alternatives, or that expedited shipping premiums are not “reasonable and necessary.” Given cost inflation and the potential for multimillion-dollar losses, companies must stress-test their product recall coverage, including downstream effects and third-party damages. New regulatory pressures, tariff-driven cost inflation and evolving coverage mean companies must assess their programs before a recall exposes gaps in both coverage and financial resources. Recommendations Effective claims recovery starts with recovery protocols integrated into business-continuity plans. Claims begin at the moment of loss, not when documentation is submitted. This proactive approach extends to valuation accuracy: Ensure property and BI values are supported by recent studies, as underreporting triggers penalties even when not explicitly stated. Companies also must understand how their coverage works when multiple policies and sub-limits interact, particularly for emerging risks like cyber third-party failures or broader supply chain recall-related events. After an event, the window for recovery is narrow, so quick decisions are critical. Claims recovery professionals can immediately handle loss quantification while operational teams simultaneously focus on business continuity. Equally important is controlling the narrative by presenting well-documented losses before insurers establish their own version of events. Leaders also should engage accountants, attorneys and technical specialists from the start. When disputes arise, their documentation and expertise will be critical. As coverage gaps widen and costs escalate across property, cyber and product claims, recovery in 2026 requires a different approach than in years past. The convergence of stricter underwriting standards, emerging coverage exclusions and cost inflation means companies’ success depends on preparation before incidents occur and swift execution when losses strike. Companies must audit their coverage now, verifying valuations, confirming cyber contingencies and stress-testing recall limits against tariff inflation. In 2026, the organizations that are well prepared will recover, while those that aren’t will discover gaps when it’s too late. Daniel Ruehle is a managing director in BDO USA’s insurance and recovery practice. He can be reached at [email protected] . 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