Top insurance risks shaping 2026 and how to prepare for what’s next

By Cedric Masondo, PSG Insure CEO

The first half of 2026 has marked a clear shift in the short-term insurance risk landscape, with weather-related catastrophes emerging as the largest force impacting claims costs. What had been a comparatively benign catastrophe environment a year ago, has moved into an elevated phase, with the frequency and severity of floods, storms and wildfires all rising.

Insurers have responded by rebuilding their pricing models around spatial analytics and geocoded climate risk. The effect extends beyond the short-term sector – actuarial bodies have begun framing extreme heat, flooding and air pollution as health risks as well, broadening long-term exposure across life, health and disability portfolios.

While weather is the defining claims theme of 2026 so far, motor remains the highest-volume claims category. Accident frequency far exceeds theft and hijacking, a contributing factor being road usage returning to pre-pandemic levels as employers implement return-to-office mandates.

The more material development, however, is on severity. Insurers report a growing tendency for vehicles to be written off after accidents that would previously have been repaired, driven by steep increases in repair costs. Imported parts, exposure to global supply chain disruption and currency volatility all feed into higher average claim values.

Behind these headline risks sit deeper structural drivers that are reinforcing one another. Climate change is raising the magnitude of catastrophe losses, ageing infrastructure is increasing property and business interruption claims, and claims inflation – driven by materials, labour and imported costs – is pushing up the price of every claim. At the same time, a hardening reinsurance market is increasing the share of losses insurers retain, amplifying the impact of each event on the local market.

The cumulative result is an expanding protection gap – the difference between economic and insured losses – which, in South Africa, continues to widen even as the global gap has narrowed, and which falls most heavily on lower-income households.

Looking ahead to the second half of the year, several risks are expected to intensify

Weather remains the first to watch. The coming months include the Cape winter storm season, followed by conditions that raise veld fire risk, and the start of the convective storm and hail season. The expected transition from a wet La Niña to a drier El Niño summer adds drought stress and heightens fire risk.

Geopolitical and oil price volatility is likely to persist even in a de-escalating conflict environment. War risk repricing and supply chain disruptions tend to outlast active hostilities, feeding into higher fuel costs, shipping delays and broader claims inflation. Local businesses feel the impact through higher landed costs, input volatility and increased uncertainty.

Another risk that we see intensifying is cyber. It is the fastest-growing exposure globally, yet insured uptake remains low in South Africa, with only around 17% of businesses carrying cyber cover. AI-driven scams and deepfakes are making attacks cheaper and more convincing, while many businesses and individuals remain underprepared.

Across all of these risks, a consistent pattern is emerging: exposure has grown faster than the cover people hold against it.

The response is a consistent set of practical steps, most of which cost little and prevent the worst outcome at claim stage – being undercovered.

Firstly, sums insured should be reviewed annually rather than rolled over, as building and repair costs have risen sharply. Policyholders should declare what has changed, including solar installations, battery systems, new equipment or shifts in turnover, as undeclared changes may not be covered.

Equally important is confirming the scope of cover against the gaps that are becoming more visible: cyber, contingent and non-damage business interruption, and appropriate extensions such as SASRIA or marine and war risk cover where relevant. Understanding what exclusions remove is now as important as understanding what is covered.

Investment in risk mitigation is also increasingly essential. Measures such as telematics in motor, improved property maintenance and basic cyber hygiene – multi-factor authentication, regular patching, staff training and tested backups – are no longer optional.

Working through these with an adviser at renewal rather than in the aftermath of a loss is crucial. An adviser can reassess changing exposures, explain where terms have tightened, and match cover to the way the risk has moved.