Cybersecurity remains the foremost risk, maintaining its leading position among identified threats in Australia. However, technology-related concerns have surged, with AI emerging as a significant issue, climbing from 11th to third place in just two years. Antonie Jagga, head of PwC’s insurance operations in Australia, highlighted the rapid acceleration of these risks, noting that the sector's preparedness is declining while global peers have improved. This widening gap serves as a red flag for the industry.
To address these challenges, Australian insurers must invest in developing skilled workforces, particularly in areas undergoing transformation through AI, such as underwriting, pricing assessments, and claims management. Modernising technological infrastructure is also crucial, as it presents both a risk mitigation strategy and an opportunity for competitive advantage.
Political risk has also climbed to fourth position among identified concerns, reflecting intensifying government attention toward the insurance sector. This shift is driven by concerns over premium increases and restricted coverage in regions vulnerable to natural disasters. Global geopolitical tensions further contribute to heightened political risk assessments among Australian insurers.
Affordability remains a defining theme as insurers navigate the balance between rising risks and consumer costs. Implementing data-driven pricing methodologies can enhance affordability by aligning premiums more closely with actual exposure. By leveraging AI and richer risk data, insurers can reduce underinsurance, keep essential protections within reach in high-risk areas, and deliver better outcomes when Australians need to make a claim.
