Technology related risks to insurance industry reach historic highs: PwC survey

On 8 September 2025, PwC’s Insurance Banana Skins 2025 survey—produced biennially with the Centre for the Study of Financial Innovation—reported a decisive shift in the insurance risk landscape: for the first time in its 14-year history, technology-related risks dominate the top three concerns for the global industry. Launched at the Reinsurance Rendez-Vous de Septembre in Monte Carlo and based on insights from hundreds of insurance professionals worldwide, including in the Cayman Islands, the survey identifies cyber-crime, artificial intelligence (AI), and technological change as the most urgent threats over the next two to three years.

Cyber-crime remains the number one risk for the third consecutive edition, with severity at an all-time high. Respondents cite the growing frequency and sophistication of attacks, the rise of ransomware-as-a-service, and heightened anxiety about the disruptive potential of generative AI in the wrong hands. Misuse or poor governance of AI is the fastest-rising risk, reflecting concerns about AI-driven fraud and regulatory breaches stemming from inadequate controls. While AI offers transformative opportunities, the report cautions that failing to harness its potential is itself a strategic risk. The third-ranked risk—falling behind technological change—highlights persistent challenges around legacy IT and the cost of modernization. Firms recognize losses from inefficiencies yet hesitate to invest for fear of rapid obsolescence; as a result, this “banana skin” increasingly differentiates leaders from laggards at a firm level.

Ric Agrella, Partner, PwC Cayman Islands, noted that technology risks now top the agenda regardless of market maturity, underscoring the need for agility and investment in transformation to stay competitive and achieve desired outcomes. He emphasized sustained responsiveness to geopolitical and digital developments as the industry continues to evolve.

Beyond technology, economic and regulatory pressures have intensified. Macroeconomic risks—at their most severe in a decade—reflect lingering inflation, uncertain interest-rate paths, and geopolitical instability, all of which complicate planning and growth. Respondents flagged affordability as a root issue, concerned with reputational risks and threats to effective risk pooling when customers struggle to pay for coverage. Regulatory risk also features prominently, with concerns that oversight is not keeping pace with emerging, tech-driven threats, and questions about the relevance and implementation quality of current rules. Calls are growing for agile, forward-looking governance that safeguards market integrity while enabling innovation.

Evelyn Urban, Director, PwC Cayman Islands, noted that insurers navigate technological risks while contending with economic headwinds and compliance demands, highlighting the need for prudent but risk-based, forward-looking regulation to foster innovation and agility. Keyur Patel, author of the report, urged insurers to challenge core assumptions—around cyber vulnerability, climate risk immediacy, and AI’s impact on business models—warning that while known risks are often well handled, looming unknowns could ultimately define the sector’s future.