In the “Insurance Banana Skins 2023” report, a joint effort by PwC and CSFI, the global insurance industry’s primary concerns have been revealed, with mounting fears over cyber crime and escalating worries regarding climate change.
The insurance industry faces its foremost challenge in the form of cyber crime. This threat encompasses the potential theft of sensitive data, phishing, and ransomware attacks.
Notably, cyber crime has held its top position as the most significant global risk since the 2021 report.
Insurers are navigating an increasingly intricate digital landscape characterised by new technologies, cloud computing, and extended supply chains. This complexity amplifies their vulnerability to cyber threats.
To counter this, the report underscores the urgent need for proactive cyber security measures integrated into both business and IT architecture.
Insurers voice concerns regarding the misuse of artificial intelligence as a potent weapon for breaching security, with a specific focus on state-sponsored cyber crime.
Rising costs associated with mitigating cyber threats are causing unease among insurers. The expansion of the insurance industry’s IT ecosystem, driven by the proliferation of internet-connected devices and reliance on cloud and third-party services, heightens the challenge of defending against cyber attacks.
Climate change has ascended to a prominent position, ranking among the top three concerns for insurers. This reflects the growing immediacy and impact of climate-related risks.
Governments and regulators are increasingly urging insurers to enhance risk quantification and management in alignment with broader Environmental, Social, and Governance (ESG) agendas.
Regulation remains the primary concern for life insurers, closely followed by cyber crime. The sector grapples with additional challenges related to interest rate risk, macroeconomic factors, and investment performance.
While technological change is a shared concern, the risk from artificial intelligence ranks lower, and climate change is of lesser concern compared to non-life and reinsurance sectors.
Property and casualty insurers in the non-life sector are primarily concerned about climate change, followed by operational risks stemming from cyber crime. High-level concerns include technology, artificial intelligence, and regulation.
Change management challenges take higher precedence in this sector compared to the life insurance sector, although macroeconomic risk is of lesser concern.
Following the record-breaking global heatwave in July 2023, climate change has risen as a significant risk for reinsurers. They share concerns about cyber crime, technology, and artificial intelligence with other sectors.
Recruitment issues are common, and reinsurers are unique in placing de-globalisation among their top ten risks, reflecting the global nature of their business and concerns about protectionism.