As the calendar turns to 2026, policyholders and insurers alike are anxiously waiting to see what the new year holds for the insurance industry. Economic volatility throughout 2025 spelled uncertainty in the financial sector, but will 2026 bring more of the same? Check out some insurance trends to watch in 2026 and how they could affect your coverage.
AI in Insurance
More and more companies across multiple sectors are integrating AI into their products; the same goes for insurers. Using AI to provide data and analytics as well as modeling insurance risks, insurers see AI as a tool to complement existing systems or upgrade longstanding processes. Before widespread implementation can occur, however, insurance companies must first create new standards for both software and hardware, ensuring both are compatible with AI modeling, as well as updating cybersecurity best practices to account for the risks associated with this burgeoning technology.
Auto Insurance in 2026
According to the U.S. Bureau of Labor Statistics, auto insurance premiums rose by 64% from September 2020 to September 2025, which outpaced the general inflation rate of 25% during the same period. While some experts expect auto insurance premiums to drop for some qualified drivers — thanks in part to new technologies like lane assist providing a safer driving experience — inflation and tariffs could both drive repair costs higher. This is especially true for foreign-made cars, which require replacement parts and materials shipped from overseas. Consequently, insurance companies will likely adjust for these price hikes by raising their premium costs.
Homeowners Insurance in 2026
Premiums for homeowners insurance climbed in 2025 and show no signs of slowing soon. In fact, Cotality Chief Data & Analytics Officer John Rogers estimated premiums will climb a combined 16% into 2027. Policies may also become more difficult to obtain in high-risk areas; for example, some insurance companies are already refusing to issue policies in regions susceptible to wildfires like California, or those prone to hurricanes like Florida. Additionally, like auto insurance, Deloitte reports homeowners insurance premiums could be affected by tariffs on imported construction materials.
Life & Health Insurance in 2026
Deloitte reports global life insurance growth is expected to decline in 2026 as American policy uncertainty may prove to be a deterrent for consumers. This, in turn, could lead many Americans to delay or reduce their coverage. While life insurance premiums dropped by 1.4% in 2025, they’re expected to increase slightly (1.7%) in 2026.
Meanwhile, health insurance premiums are expected to increase in 49 states, according to ValuePenguin. In Illinois, the average monthly cost of health insurance will increase from $684 to $888 — a 30% increase. Arkansas will see the largest monthly increase, jumping from $494 to $823 (a 67% increase), while Alaska will be the only state to see costs drop, going from $1,088 to $1,037 — a 5% decrease. These higher premiums are being driven by a combination of factors, including rising medical costs, high demand for GLP-1 drugs (like Ozempic), and changes to marketplace discounts and enhanced subsidies.
Let our team help find insurance policies to fit your lifestyle and budget this year. Contact Agent Noele Tatlock at (309) 642-6855 or email.