Rising production demand and government funding have recently driven expansion and growth across manufacturing, but the sector now faces a more complex risk environment. Rapid digital transformation, shifting geopolitics, and changing workforce demographics are increasing uncertainty. In the commercial insurance market, well-managed manufacturers have seen pricing moderate and conditions soften in some property lines. However, most casualty and specialty lines—especially cyber—remain difficult, as insurers narrow their appetites and favor accounts that can demonstrate data-driven loss control.
In the current environment, several risks could undermine the sector’s future stability. As such, manufacturing businesses
should monitor emerging developments that may impact their operations and insurance portfolios this year—including
technological advancements, cybersecurity threats, supply chain challenges and workforce changes—and adjust their risk
management programs accordingly. This article outlines manufacturing sector trends to watch in 2026 and offers strategies to
help navigate them.
Technological Advancements
Workplace technology continues to advance in the manufacturing sector, with artificial intelligence (AI) tools, Internet of Things
(IoT) devices, smart machinery and other digital solutions helping businesses streamline workflows and maximize operational
efficiencies on the production floor. According to a recent report from Rockwell Automation, over half (56%) of manufacturers
are piloting smart manufacturing technology, while 20% are using it at scale and another 20% are planning future investments.
Nevertheless, increased reliance on such technology can shift manufacturing companies’ larger risk profiles. In the event of
system failures or outages, impacted businesses could face prolonged operational disruptions, production delays and related
losses. This technology also collects vast amounts of sensitive information, making manufacturing businesses increasingly
vulnerable to costly breaches and data exposure.
In light of these concerns, insurers have begun implementing stricter underwriting requirements (e.g., risk modeling, data
governance and predictive maintenance) for businesses that use AI tools, IoT devices and other advanced software in their
operations to ensure technological resilience and limit the likelihood of associated business interruption and cyber claims. As
manufacturing companies adopt these solutions, they must consider the unique risks that this technology poses, communicate
openly with insurers to determine necessary safeguards and data-driven metrics, and address potential disruptions in their
business continuity plans.
Cybersecurity Threats
Especially as a growing number of manufacturing businesses integrate technology within their operations and allow their
digital supply chains to become more interconnected, this introduces additional cyber exposures. What’s worse, some of the
sector’s latest technology is evolving so quickly that it’s outpacing the software being developed to protect it, leaving it
susceptible to cyberattacks. AI-amplified threats, IT vendor vulnerabilities and other third-party cyber risks have become
particularly prevalent, often contributing to lasting disruptions and costly losses across the manufacturing sector. According to
cybersecurity firm BitSight, threat actors targeted manufacturers more than any other industry in 2025, highlighting the
expanding severity of cyber exposures. In this landscape, cyber insurance remains paramount; however, manufacturing
companies are likely to encounter competitive market dynamics, stringent underwriting standards, higher premiums and more
restrictive coverage terms as insurers attempt to offset surging losses.
To help address these challenges, it’s best for manufacturing businesses to maintain strong cyber hygiene practices (e.g.,
routine staff training, strict access controls, advanced threat detection software, patch management systems, frequent data
backups and incident response planning), carefully vet potential IT vendors, and ensure all technology-related policies and
procedures align with underwriting requirements.
Supply Chain Challenges
Sweeping geopolitical tensions, global transportation delays and extreme weather events continue to fuel manufacturing
inventory shortages and sourcing issues for various raw materials. Complicating matters, emerging tariffs and trade policies are
generating greater economic turbulence and, consequently, threatening manufacturers’ current sourcing strategies. These
supply chain difficulties can cause widespread communication breakdowns regarding available inventory, prolong production
timelines, delay the delivery of finished goods and, in turn, compound operational expenses.
As a result of these issues, reshoring and onshoring have gained momentum throughout the manufacturing sector, with many
companies moving their operations to domestic locations and investing in local or regional suppliers whenever possible.
According to global manufacturing and supply chain company Fictiv, over two-thirds (68%) of industry leaders are prioritizing
onshoring tactics to bolster supply chain resiliency. As supply chain challenges press on for the foreseeable future,
manufacturing businesses should review their existing sourcing practices to determine whether changes are necessary and
leverage alternative strategies to maintain resilient operations. This may entail implementing more advanced inventory
management policies, building strong supplier relationships, using tracking technology to uphold supply chain visibility, and
developing contingency plans to manage possible disruptions. Manufacturers should also review their business interruption
policies to ensure coverage addresses evolving supply chain exposures and, if needed, consider customized risk transfer
solutions.
Workforce Changes
The U.S. workforce is aging, with baby boomers accounting for a considerable share of the labor market. This poses serious
workplace safety risks, as multiple studies have found that older employees are more susceptible to severe occupational
injuries and related workers’ compensation claims than their younger counterparts. Given that the National Safety Council
reported that the manufacturing sector currently holds the highest recordable injury and illness rate per 10,000 workers across
all industries, this trend is particularly concerning. Even as baby boomers retire and exit the workforce, manufacturers will have
to grapple with worsening labor shortages. In response, they may have to hire and upskill less experienced employees to fill
talent gaps. This poses similar safety risks, as OSHA data shows that nearly one-third of occupational injuries and associated
workers’ compensation claims occur among employees in their first year on the job.
To address labor challenges and keep workers’ compensation costs under control, manufacturing businesses should adopt
proactive HR practices and staff retention strategies (e.g., improved working conditions, competitive pay, and consistent career
growth and skills development opportunities). They should also establish a strong safety culture by providing employees of all
experience levels with proper training and resources on common workplace hazards. Manufacturing businesses should be sure
to document these initiatives for their insurers to support better underwriting outcomes.
Several trends are currently impacting the manufacturing sector, emphasizing the importance of staying informed and
adaptive. By tracking these developments and mitigating any associated exposures, manufacturing businesses can foster longterm growth, boost operational efficiency and address their unique insurance needs. Contact us today for additional industryspecific risk management tips and coverage solutions.
Material posted on this website is for informational purposes only and does not constitute a legal opinion or medical advice. Contact your legal representative or medical professional for information specific to your legal or medical needs.
