Originally published by Insurance Thought Leadership | January 26, 2026
Out Front Ideas with Kimberly and Mark kicks off annually with the “20 Issues to Watch” webinar. While there are certainly more than 20 issues to discuss, the focus is on high-impact matters in risk management and employee benefits that require more attention. These are essential issues for every risk manager, HR manager, and insurance professional to monitor in 2026.
1. Connected Risks
Risk does not happen in a silo, requiring assessment across the business and agile planning. Risk managers and their partners must be more diligent than ever in evaluating overlapping risks, including environmental, technological, and human factors. Most organizations recognize their risks, but few are fully prepared to tackle them.
2. Fraud as a Systemic Risk
The Coalition Against Insurance Fraud estimates that fraud costs the insurance industry over $308 billion per year. It can take the form of unethical physicians performing unnecessary surgeries, medical providers billing for services never rendered, and plaintiffs fabricating or exaggerating injuries. Fraud must be met with meaningful consequences, and the industry must actively identify fraud, share intelligence, and demand prosecution.
3. AI Lessons Learned from Early Adoption
Many early AI adopters initially focused solely on platform deployment, only to learn that success hinges on a clear use case tied to measurable business outcomes and a return on investment. Goals for adoption must be clear and concise. Additional considerations include stakeholder engagement, alignment and execution, data readiness, and governance.
4. Industry Engagement
In-person industry events bring colleagues together to help solve problems, exchange ideas, and learn from one another. Conference attendance has not returned to pre-pandemic levels, and that shift has come at a cost to the collective learning and collaboration that strengthen our industry. Reconsider the value of active industry participation and, if given the opportunity, attend a conference.
5. Healthcare Trends
Access to care remains a critical concern, particularly for rural healthcare entities at risk of closure due to continuing physician shortages. As pandemic-era waivers expire, telehealth opportunities are also ending, as physicians can only treat patients within the states where they are licensed. However, AI continues to drive health technology innovation, offering early diagnostic testing and opportunities for self-guided care. Wearables continue to gain popularity, with more industries deploying them to enhance workplace safety.
6. Insurance Market Pressure Points
Legal system abuse continues to worsen the development of liability claims, keeping commercial auto unprofitable despite a decade of premium increases. In response, there is growing interest in quota-share liability towers and captives. The property market avoided hurricane impacts last year, but those benefits were offset by wildfires, with hail and severe convective storms now driving most global catastrophe losses. Workers’ compensation remains competitive, yet deteriorating claims have pushed combined ratios above 100% in California and Nevada, signaling an end to the prolonged soft market and flatter rate expectations ahead.
7. Catastrophe Risk Becomes Baseline Planning
For risk managers, what was once an ad hoc emergency response has become a structured playbook to follow in the event of a catastrophe. Some are even shifting from a coordinated team to a business unit that oversees climate, business continuity, and catastrophes. This approach outlines clear roles, responsibilities, and consistent expectations in the event of an incident.
8. Claims Insights
Medical inflation in workers’ compensation has historically lagged behind broader healthcare inflation due to fee schedules, but those pressures are now clearly emerging. The National Council on Compensation Insurance (NCCI) reported a 6% increase in both indemnity and medical claim severity in 2024, while the Workers’ Compensation Insurance Rating Bureau (WCIRB) in California noted a 9% increase in medical costs. Additionally, expanded mental health claims, catastrophic injuries, and cancer presumptions for first responders are affecting long-term costs.
9. AI in Business Transformation
Fluency in AI is becoming essential for organizations as they adapt to challenges. When paired with user-centric design, AI can drive transformation by improving efficiency while still relying on employees’ critical thinking. Organizations that hesitate to adopt automation risk falling behind, especially as time savings can be reinvested in innovation.
10. California Workers’ Compensation
California remains one of the costliest workers’ compensation states. Savings from the 2012 reforms have been eroded by rising litigation and medical inflation, driving a 127% combined ratio in 2024 and prompting renewed reform discussions. The primary cost driver is cumulative trauma (CT) claims, which broadly cover degenerative conditions and account for over 21% of claims and 38% of litigated cases. While meaningful reform would require addressing CT claims, political resistance makes significant change unlikely.
11. Employee Benefits
Employers are prioritizing engagement, retention, and culture through continuous employee listening and lifecycle surveys. At the same time, health plan costs continue to rise, with projected increases of 6.5–7.6% in 2026, according to Mercer, and growing concern over GLP-1 drug spending. While point solutions remain popular, complexity is increasing. Employees increasingly value purpose, belonging, well-being, and psychological safety as organizations brace for tighter budgets and slower pay growth.
12. Legal System Abuse and Tort Reform
Between 2023 and 2024, the number of verdicts exceeding $10 million increased by 50%, while verdicts over $100 million surged by 68%. These trends can be exceptionally difficult to reverse. However, there has been incremental success, with Florida and Georgia enacting reforms to curb litigation abuse, and several other states considering similar legislation. For the impact to truly resonate with the public, the focus must shift to how these verdicts affect everyday life, including lost jobs, higher prices, and reduced access to services.
13. Workplace Mental Health and Well-being
Supporting psychological well-being is a strategic imperative for engagement, productivity, and safety. Burnout and mental health directly affect business performance and recovery outcomes. Mental health claims now rank second only to pregnancy in leave and disability, surpassing musculoskeletal injuries, and are increasingly recognized as barriers to injured worker recovery. Early identification and targeted support, including behavioral health resources and virtual care options, can improve outcomes and shorten recovery timelines.
14. Cyber Risk
Cybersecurity remains a top concern as ransomware attacks scale through ransomware-as-a-service, expanded attack surfaces, and third-party vulnerabilities. Many breaches go undetected for months, and repeat attacks are common when weaknesses persist. AI-driven tactics, including deepfake executive scams, are increasing risk. Human error remains the weakest link, making continuous employee training, phishing simulations, and healthy skepticism essential to an effective cybersecurity strategy.
15. Workforce Considerations
Retaining today’s workforce begins with understanding employee expectations around growth and flexibility. Employees increasingly value career mobility, skills that support current roles, and opportunities to build future capabilities. In hybrid environments, organizations are expanding virtual reality training and self-paced, high-impact “burst” learning programs. Clearly defined career paths are more important than ever, particularly as expectations for flexibility rise. PwC’s 2025 research found that 58% of employees would rather quit than return to full-time office work, up from 35% in 2023.
16. Public Entity Challenges
Workers’ compensation presumptions and heightened law enforcement liability exposures present unique risks for the public entity sector. At the same time, public entity risk managers face constrained budgets, limited staffing, and aging infrastructure. Pension liabilities remain a significant concern, with recent estimates placing nationwide unfunded public pension obligations at $1.2 trillion. As claim costs rise, higher taxes are likely to follow, and when revenues fall short, essential services are reduced. Because taxpayers ultimately bear these costs, these challenges should matter to private sector businesses and risk managers as well.
17. Reputational Risk in a Real-Time World
Reputational risk is a concern throughout organizations, whether a social media post misses the mark or an operational blunder occurs. Reputational events may affect business success, customer relationships, and growth opportunities. When a crisis occurs, preparation is critical. The response often determines the extent of reputational damage and risk exposure. Knowing how to frame that response for the intended audience is essential and requires understanding stakeholder, employee, and customer perceptions in advance.
18. Regulatory Overreach and Unintended Consequences
Overregulation continues to create significant challenges for businesses and risk managers. In-state physician licensing requirements temporarily waived during the pandemic improved access to care, but those requirements have since been rolled back. Similar regulatory friction exists for claims professionals, particularly in the handling of in-state workers’ compensation claims. While well-intentioned, these regulations can fail to keep pace with technology, market realities, and evolving risks.
19. Operational Readiness in the Age of AI
As technology reshapes business models, organizations must ask whether their operations are ready for the future. Without adaptation, some business models risk becoming obsolete within the next decade.
20. Critical Digital Infrastructure: Data Centers as a System Risk
None of today’s AI-driven innovations are possible without the massive data centers that power AI and cloud-based systems. These facilities have come under increased scrutiny as some communities court them, while others resist due to strain on critical infrastructure, particularly electrical grids and water supplies. Data centers also create substantial downstream risk due to their role as critical service providers. A single outage can disrupt operations for thousands of businesses.
Listen to the archive of our complete Issues to Watch webinar here. Follow Out Front Ideas with Kimberly and Mark on LinkedIn for more information about coming events and webinars.