Navigating Insurance Challenges in Logistics & Supply Chain for 2026
In recent years, elevated interest rates and persistent inflation have posed significant challenges to global supply chains, affecting the insurance landscape for logistics and supply chain businesses as we enter 2026. According to Jeffrey Lang, president of retail property and casualty at Venbrook Group LLC, these financial factors impact not only borrowing costs but also various aspects of operational risk, including market value dynamics and equipment maintenance. The extended retention of aging fleets and machinery increases the risk of equipment failure, a critical concern for companies with limited financial flexibility.
Impact of Elevated Costs on Construction
The January 2025 fires in Pacific Palisades also continue to influence the construction costs for some businesses, as rebuilding efforts have seen soaring expenses for labor and materials like lumber and concrete. Although these pressures have slightly eased, ongoing inflation keeps construction materials at premium prices globally, presenting further challenges for regulatory compliance requirements in construction-related insurance policies.
Enhancing Organizational Resilience
Executives in the supply chain sector are increasingly focused on enhancing their organizational resilience. Lang notes that businesses are preparing for supplier disruptions by adopting more robust redundancy measures and strengthening their business continuity plans. This shift is reflected in the underwriting process, where insurers are scrutinizing clients’ contingency plans and supply chain strategies, sometimes resulting in policy non-renewals for companies perceived as insufficiently resilient.
Leveraging AI and Strategic Sourcing
Insurance underwriters are leveraging artificial intelligence to refine claims adjustments, further highlighting the importance of quick recovery times after major disruptions. Lang warns that if a company can't recover promptly, insurers may reconsider the risk of underwriting such policies. To demonstrate agility to cautious insurers, firms are encouraged to explore strategies like nearshoring and reshoring, or diversifying their supplier base. Supply chain risk discussions in 2026 are increasingly centered around capital resilience, continuity planning, and strategic sourcing.
Shifting Roles and Merging Trends
Lang observes that insurance brokers are transitioning toward roles as capital advisors, considering parametric risk approaches that don't necessarily cover the full extent of losses from an incident. The focus is shifting to capital expenditures, reflecting the industry's evolving risk appetite. Mergers and acquisitions within the supply chain sector are anticipated to increase in 2026, driven by strategic evaluations that include cultural assessments alongside financial considerations. The proposed merger of Union Pacific and Norfolk Southern railways highlights potential consolidation trends within certain logistics segments, although Lang notes a different trajectory in the aviation sector, where regional carriers are gaining preference.
The Role of AI in Logistics and Supply Chain
Advancements in artificial intelligence are significantly impacting logistics and supply chain operations. Lang advises caution, acknowledging that while AI can reduce human errors and improve decision-making, it can also introduce new risks if not managed with appropriate governance. For insurance professionals, the evolving landscape underscores the critical need for strategic planning and adaptability in managing complex risks and operational challenges.