Cybersecurity remains the foremost risk for Australian insurers, maintaining its position at the top of the risk landscape. However, technology-related concerns, especially those involving AI, have surged dramatically. AI has ascended from the 11th position to the third in just two years, underscoring the rapid evolution of technological risks within the industry.
Antonie Jagga, leader of PwC’s insurance operations in Australia, highlighted the unprecedented speed at which these risks are developing. He noted that the acceleration of risks related to cyber, technology, and AI is creating a preparedness gap that did not exist two years ago. This gap is particularly concerning as Australian insurers are feeling less prepared to manage these challenges compared to their global peers.
The survey's findings align with the Aon plc 2025 Global Risk Management Survey, which also identified digital security breaches and cyberattacks as the primary threats to Australian enterprises. Notably, 93% of Australian participants in the Aon survey reported having structured approaches for assessing their digital security risk exposure.
To address these challenges, Australian insurers are encouraged to invest in developing skilled workforces adept in areas undergoing transformation through AI, such as underwriting, pricing assessments, and claims management. Modernising technological infrastructure is also crucial, serving both as a risk mitigation strategy and an opportunity for competitive advantage.
Political risk has also climbed to the fourth position among identified concerns, reflecting intensifying government attention toward the insurance sector. This focus 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.
Jagga emphasised that the relationship between rising risks and consumer costs will remain central to industry discussions. He pointed out that affordability remains a defining theme going into 2026, translating into elevated political risk. Insurers need to demonstrate that they are leveraging technology not just to manage their own risks but also to make coverage more accessible and affordable for Australians, particularly in high-risk areas.
Implementing data-driven pricing methodologies can enhance affordability. By using AI and richer risk data, insurers can better align premiums to actual exposure rather than relying on traditional methods. This approach can reduce underinsurance, keep essential protections within reach in high-risk areas, and deliver better outcomes when Australians need to make a claim.
