Is It Time for Your Mid-Year Insurance Check-Up?

A lot can change in six months. If you’re waiting a full year between risk assessments, problems and opportunities could slip through the cracks. The mid-year point is a good time for an insurance check-up that assesses your company’s risks, strategies and coverage. Right now, changes in the insurance market, evolving climate risks and emerging tech exposures deserve careful attention.

What a Softening Insurance Market Means for Your Business

A softening property and casualty insurance market has given businesses some relief. According to a report from the Council of Insurance Agents & Brokers, average rates decreased by 1.2% in the first quarter of 2026. Large and medium accounts saw decreases of 2.7% and 1.9%, respectively, while small accounts saw a small average rate increase of 1.1%.

Rates also varied by line. While most lines saw falling premiums, commercial auto was up by 5.8%, umbrella was up by 4.8% and general liability was up by 2.6%. Location can make a big difference, as well. Commercial property rates fell by 5.5% on average, but non-cat properties saw the biggest decreases in rates.

Despite the variation, overall, the market is significantly softer than it has been in recent years. For businesses, this can provide some financial relief from rate hikes. It’s also an opportunity to strengthen your coverage.

• Do you have coverage gaps that you can fill? Emerging risks can lead to new exposures, and this may be a good time to negotiate more robust coverage or add separate policies.
• Do you have sufficient limits? Litigation costs have been rising, and nuclear verdicts can put businesses in jeopardy. Falling rates may make it easier, and more affordable, to negotiate higher limits.

How the Arrival of a Super El Niño Could Affect Property Insurance

Commercial property insurance rates were down by 5.5% in the first quarter, according to CIAB. However, climate risks continue to put pressure on the insurance market.

As predicted, a super El Niño has developed. According to Smithsonian Magazine, this is a naturally occurring climate pattern characterized by warm surface water in the Pacific Ocean. However, the current El Niño is particularly powerful, and it may even be one of the strongest in recorded history.

Whether this is beneficial or disruptive depends on your location. NOAA says El Niño tends to lead to lower levels of hurricane activity in the Atlantic basin, but it can trigger higher levels of activity in the eastern and central Pacific basins. In other words, the Florida and surrounding states may catch a break, but Hawaii may face a challenging season.

El Niño can also trigger increased drought and wildfire risk in the Northwest, according to the USDA. In Southern California, heavy rainfall is possible, and it could increase the risk of landslides, according to the California Department of Conservation. Areas burned in recent wildfires can be particularly vulnerable to flash floods and debris flows.

For businesses, a strong El Niño could increase the risk of property damage and supply chain disruption.

• Does your supply chain include backup options for essential goods that may be disrupted by storms or wildfires?
• Have you taken measures to fortify your property against flood, landslide and wildfire risks?
• Do you have sufficient insurance? Standard commercial property insurance does not cover flood or landslide risks. For the former, you need a standalone flood insurance policy. For the latter, you need a Difference in Conditions policy or endorsement that adds earth movement coverage.

Managing AI and Cyber Exposure

According to a survey from McKinsey & Company, 62% of respondents say their organizations are at least experimenting with AI.

With most companies still in the pilot or experimentation phases of AI adoption, the risk is high. Not all experiments pan out, and businesses may experience setbacks and unexpected liabilities before they start to see value. In one example of what can go wrong, Tom’s Hardware says a Claude-powered AI coding agent deleted a company’s entire database in just nine seconds. Afterward, the AI agent confessed that it violated every principle it had been given.

But AI can be a powerful tool – as hackers have discovered. According to Cyber Defense Magazine, AI-powered malware has emerged as a significant threat. For example, BlackMatter ransomware uses AI to overcome standard cybersecurity tools. AI-powered malware can also act autonomously, which enables hackers to carry out a greater number of attacks, and create personalized attacks that are more likely to trick recipients.

For businesses, technological advancements are both an opportunity and a source of risk.

• Do you have insurance coverage for your AI initiatives? Watch for new AI exclusions in your insurance policies and assess whether additional coverage is needed.
• Are your vendor contracts and software supply chains strong? Your vendors may also be adopting AI, and cyberattacks on software vendors have become common, so it’s a good time to review contracts for indemnification provisions and insurance requirements.
• Are your cybersecurity practices keeping up with new threats? Businesses may need to increase their defenses, for example, by using AI threat detection. Cyber insurance rates have been falling, so this is also a good time to assess your insurance coverage.

Risks are evolving fast. A mid-year review can help identify vulnerabilities before they become costly problems. Heffernan Insurance Brokers can help your business evaluate its risk, strengthen its coverage strategies and build resilience for the future. Learn more about our business insurance options.