Australian Insurers Falling Behind in Cyber and AI Risk Readiness

The survey, now in its tenth iteration, gathered insights from 698 insurance executives across 42 territories, including 37 from Australia, encompassing leaders from major general, life, and composite insurance organisations. Results indicated that Australian insurers scored 6.6% lower on the Preparedness Index compared to global industry counterparts. The Banana Skins Index, which measures industry perception of risks, decreased by 6% over two years, potentially indicating adaptation patterns or risk fatigue across the Australian market.

Digital security threats maintain the leading position among identified risks in Australia. However, technology concerns have moved into second place after climbing four positions since 2023. Most notably, artificial intelligence has emerged as a major concern, advancing from 11th place to third position in just two years.

Antonie Jagga, who leads PwC’s insurance operations in Australia, commented on the speed of these changes. “Risks related to cyber, technology, and AI are accelerating at a speed we haven’t seen before in the insurance industry. This is creating a preparedness gap that didn’t exist two years ago, and we are seeing that Australian insurers are feeling less prepared to manage these challenges compared to their global peers,” he said.

Jagga emphasised the trajectory of AI risk recognition. “Two years ago, AI wasn’t even in our top 10 risks. Today, it’s number three and climbing fast, but our research shows the sector’s preparedness is declining while global peers have improved.”

This growing preparedness gap underscores the urgent need for Australian insurers to enhance their risk management strategies, invest in technological capabilities, and foster a culture of continuous learning to effectively navigate the evolving risk landscape.